Bears Triumph as Long-term Symmetric Triangle Finally Breached

By Tomasz Wisniewski|

Published: June 16 2023, 12:56 GMT+0

Bears Triumph as Long-term Symmetric Triangle Finally Breached

This week indeed witnessed some extreme volatility in the USD due to a robust macroeconomic calendar. Interestingly, the most significant fluctuations occurred on Thursday, despite crucial data being released on Tuesday and Wednesday. These volatility spikes provided solid trading signals across numerous instruments, with USDCAD standing out from a technical analysis perspective.

Since September 2022, USDCAD has been moving within a long-term symmetrical triangle pattern (black). This week, however, the pair managed to break out of this pattern, trending downwards. Such symmetrical triangles are typically strong trading signals, and in this case, the breakout suggests a sell signal.

Post-breakout, the bearish momentum in USDCAD increased, pushing the price to the horizontal support level at 1.32 (yellow). This level is not only a key support from November 2022 and a crucial resistance from July 2022, but also corresponds to the 38.2 Fibonacci level, making it a significant support point.

In the event of a breakout, we could expect further declines towards the long-term green uptrend line. Given the current market dynamics, I believe this scenario is more probable in the coming weeks.