Price action on USD/CAD is currently forming a potential bearish ABCD pattern on the 240- minute chart. The distance from A to B has ideal symmetry to the C to D leg and point D is confirmed with the 127.2% Fibonacci expansion level of the B to C move.
The initial reaction to the Canadian dollar was positive this morning after a manufacturing report came in slightly better than expected. Manufacturing shipments climbed 0.6% in September and August’s report improved to a flat a reading. The news is helping the USD/CAD trade below the 1.05 level and eventually over the next couple of trading sessions we may finally see a downward move to 1.04.
The trade: Short USD/CAD at market (currently trading at 1.0470), with a stop loss at 1.0503, and a take profit at 1.0404. The Risk/Reward Ratio is 1:2.
Edward J. Moya
WorldWideMarkets Online Trading