USDCAD, the Loonie is one of the seven major currency pairs that contain the US dollar and are the most traded pairs on the forex market. Due to a large amount of trading, it is considered to be very liquid. You can see that it is reaching the strong key point of interest long-term and we want to share the possible trading strategy for it. Let us begin with the monthly view.
Looking at the monthly chart we can identify two patterns. The falling wedge (blue lines) and descending triangle (red lines). The uptrend line (grey line) is the long-term support. The pair is now testing the near-term breaking point 1.2400 level for the downside continuation, to a point for which we believe, is the key point of interest now, 1.2200 level.
On a daily chart, we can see a downside pressure on the descending channel line 1.2410 level. The daily close below this level is required for a downside continuation into the 1.2200 level. Although we could see a bounce from here near-term the downtrend within the two indicated patterns will prevail. Look for the opportunities to short this pair targeting at least 1.2200 level. Trying to catch an upside bounce from here and trade it could be a strong strategy for you especially looking at the RSI (13) breaking below 30.
On the clear full candle break below the 1.2400 level, we could see the target of this formation in the 1.2100-1.2200 zone. This is the take profit zone for sellers and is also the buying zone, but only after the daily reaction from it.
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