After a substantial move up for the last couple of weeks, the USDCAD is starting to fall again. The weekly USDCAD shows that price has reached the ATR (red plus sign) and is potentially forming a bearish candlestick. There are two potential areas below price that may support the USDCAD. The first area of potential support is 1.3068 (previous low highlighted by the blue dotted line). The second potential support area is the line of white dots at 1.2942.
The USDCAD daily chart shows that an ADX peak has formed, which likely will push price back to the ATR (blue plus sign) at 1.3255. Additionally, the Stochastics is now descending after being overbought. The important question here is, will price continue the bearish move? This is where it is beneifical to check the six hour chart to see what patterns are developing intraday.
The six hour chart provides additional information for intraday traders. First, price is at the line of white dots. This area may act as support. It is where price goes next that is important. With the Stochastics below 20, indicating that the market is potentially overextended to the downside, a potential upmove is likely today. Contrarian traders may choose to take advantage of the retracement back to 1.3415. However, if the 1.3415 acts as resistance, then price will likely resume the bearish direction. A typical candlestick pattern in this area would be a bearish candlestick formation or a three bar pivot high (with the third bar closeding beneather the middle bar, similar to the three bar pivot high that formed on the daily chart and kicked off the descent to the ATR), This is where trend traders are likely to step in for a trade, as the six hour chart would be confirming the downward move.
Alternatively, if the ATR on the six hour chart does not provide resistnace then more likely than not, a retest of the high at 1.3467 is likely.