In today’s technical analysis, let’s take a look at a very promising setup on the American dollar to Canadian dollar (USD/CAD). What we can see here is a rounded bottom formation, also known as a cup and handle pattern—one of the most classical reversal structures in technical analysis.
Currently, the market is in the process of drawing the handle of this pattern, marked with red. This phase usually comes with slight consolidation or a mild pullback before an eventual breakout higher. For this formation to become active, we need to see a decisive breakout above the upper green resistance line, which is capping the pattern from above. A daily close above that level would trigger a strong buy signal and open the path for a longer-term bullish move.
On the other hand, it’s important to remain cautious. The entire setup would be invalidated if the price broke below the blue horizontal support, which serves as the base of the handle. While such a scenario currently looks unlikely, traders should keep an eye on this level for confirmation.