USDCAD 1D Analysis: Anticipating a Breakout
📅 Let's dive into today's analysis. We'll be focusing on the USDCAD pair in the 1D time frame.
⌛️ Long-term Range Box
In the 1D time frame, we observe a large, long-term range box that spans 664 days. This box has experienced a complete High Wave Cycle (HWC) range, which is confirmed by the flat SMA99, indicating minimal slope and nearly flat movement over a long period.
♟ Key Levels
Range Box Bottom: 1.31434
Range Box Top: 1.38725
Breaking either of these lines will likely initiate a new trend for the HWC.
Medium Wave Cycle (MWC) Support: 1.35973
MWC Resistance: 1.37805
🪤 Momentum Indicators
As discussed in yesterday’s analysis, momentum oscillators like RSI are less effective in range-bound markets. In this case, although the RSI broke the 43.14 support, the market did not gain bearish momentum because of the ranging condition. This exemplifies why RSI should not be heavily relied upon in such scenarios.
📉 Bearish Scenario
If a candle closes below the 1.35973 area, we can expect the price to move towards the bottom of the range box at 1.31434. This support is crucial and could push the price back to the top of the range.
📈 Bullish Scenario
Conversely, if the price breaks above 1.37805, it may move towards the top of the box at 1.38725. However, this move is less likely due to the weakness observed in the green candles, indicating weaker buyer strength.
🔍 Candle Analysis
Examining the candles shows that reaching the top of the range box takes significant time, with small green candles. Conversely, reaching the bottom of the box from the top happens quickly with strong red candles. Given the weak green candles in the latest upward move that didn't even reach the top of the box, the likelihood of a downward breakout is higher.
🎯 Target Levels
In case of a downward breakout, switching to the weekly time frame helps identify important levels:
First Target: 1.30183 (0.5 Fibonacci level)
Second Target: 1.27624
Third Target: 1.22926 (a very significant support for this pair)
📝 Conclusion
The USDCAD pair is currently trading within a long-term range, showing weak buyer momentum and stronger bearish tendencies. A breakout from this range, particularly to the downside, seems more probable given the current market conditions. Traders should watch key levels closely for confirmation and be ready to act accordingly once a breakout occurs.
🧠💼 Always remember that trading futures involves inherent risks, and improper risk management can lead to margin calls. Stick to your capital management principles and use stop-loss orders, aiming for an initial risk-to-reward ratio of 2.
🫶 If you found this analysis helpful and want to support me, please like and share this analysis. Feel free to leave your comments or suggest a pair you'd like me to analyze next.
⌛️ Long-term Range Box
In the 1D time frame, we observe a large, long-term range box that spans 664 days. This box has experienced a complete High Wave Cycle (HWC) range, which is confirmed by the flat SMA99, indicating minimal slope and nearly flat movement over a long period.
♟ Key Levels
Range Box Bottom: 1.31434
Range Box Top: 1.38725
Breaking either of these lines will likely initiate a new trend for the HWC.
Medium Wave Cycle (MWC) Support: 1.35973
MWC Resistance: 1.37805
🪤 Momentum Indicators
As discussed in yesterday’s analysis, momentum oscillators like RSI are less effective in range-bound markets. In this case, although the RSI broke the 43.14 support, the market did not gain bearish momentum because of the ranging condition. This exemplifies why RSI should not be heavily relied upon in such scenarios.
📉 Bearish Scenario
If a candle closes below the 1.35973 area, we can expect the price to move towards the bottom of the range box at 1.31434. This support is crucial and could push the price back to the top of the range.
📈 Bullish Scenario
Conversely, if the price breaks above 1.37805, it may move towards the top of the box at 1.38725. However, this move is less likely due to the weakness observed in the green candles, indicating weaker buyer strength.
🔍 Candle Analysis
Examining the candles shows that reaching the top of the range box takes significant time, with small green candles. Conversely, reaching the bottom of the box from the top happens quickly with strong red candles. Given the weak green candles in the latest upward move that didn't even reach the top of the box, the likelihood of a downward breakout is higher.
🎯 Target Levels
In case of a downward breakout, switching to the weekly time frame helps identify important levels:
First Target: 1.30183 (0.5 Fibonacci level)
Second Target: 1.27624
Third Target: 1.22926 (a very significant support for this pair)
📝 Conclusion
The USDCAD pair is currently trading within a long-term range, showing weak buyer momentum and stronger bearish tendencies. A breakout from this range, particularly to the downside, seems more probable given the current market conditions. Traders should watch key levels closely for confirmation and be ready to act accordingly once a breakout occurs.
🧠💼 Always remember that trading futures involves inherent risks, and improper risk management can lead to margin calls. Stick to your capital management principles and use stop-loss orders, aiming for an initial risk-to-reward ratio of 2.
🫶 If you found this analysis helpful and want to support me, please like and share this analysis. Feel free to leave your comments or suggest a pair you'd like me to analyze next.
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