USD/CAD: Pennant Pattern Forming
Forex4you | May 22, 2015 07:07AM ET
The USD/CAD pair had rebounded higher after making lows at 1.1928 at the start of the month.
It has rallied strongly higher up to the level of the monthly pivot situated at 1.2245, and started to consolidate.
This sideways consolidation has formed into what looks like a pennant continuation pattern.
If the exchange rate manages to break clearly above the monthly pivot, including a 20-point margin, which means above 1.2265, then I think that could confirm the next bullish leg higher for the pennant, which would probably reach an old neck-line at 1.2430.
Alternatively, given the recent breakdown out of the H&S there is a possibility the pennant could fail, resulting in a continuation of the short-term trend down. A break below the 1.2163 range lows, would probably confirm a move down to a target at 1.2110.
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