USD/CAD: Testing Key Support Within Pennant Formation

In today’s technical analysis, we focus on the USD/CAD, which has been locked in a sideways trend for several days. This consolidation is taking shape as a classic pennant formation, marked with converging blue trendlines. The narrowing range suggests that a breakout—either upward or downward—could be imminent.

Today, the pair is pressing against a critical juncture: the lower boundary of the pennant, which is aligning with a horizontal support level around the yellow area. So far, the reaction has been a modest bounce, showing that buyers are still defending this support zone.

How to interpret this technically?

• A clear daily close below the yellow support area and the pennant’s lower edge would activate a strong sell signal, opening the path for a downward continuation.

• Alternatively, a rebound from this area and a rally toward the upper trendline—followed by a breakout to the upside—would provide a bullish signal and suggest a fresh move higher.

As the range tightens, the pair is likely to pick a direction soon. Traders should stay alert for any decisive price action near the boundaries of this formation.

Source: https://www.axiory.com/analytics/technical-analysis/usd-cad-testing-key-support-within-pennant-formati