In today’s technical piece, I would like to highlight the weakening of the US dollar and a well-formed technical setup on the USD/CAD pair that deserves traders’ attention.
What we see here is a falling wedge pattern, clearly outlined with blue trendlines. This structure has been respected with high precision, forming a series of lower highs and lower lows, gradually tightening the range. It’s a classic technical formation that often precedes a breakout—though the direction isn’t guaranteed.
The lower boundary of the wedge was tested on May 2nd, and the price reacted by moving sharply toward the upper boundary, which was tested during the overnight session. Interestingly, we are now observing a bearish bounce from the upper trendline, which suggests that sellers may still have control in the short term.
So how to approach this setup?
Conversely, a daily close below the lower support of the wedge would trigger a strong sell signal, likely opening the door to a deeper decline in the pair.