USD/CAD: Testing Key Support Within Pennant Formation

USD/CAD: Testing Key Support Within Pennant Formation
In today’s technical analysis, we focus on the USD/CAD, which has been locked in a sideways trend for several days. This consolidation is taking shape as a classic pennant formation, marked with converging blue trendlines. The narrowing range suggests that a breakout—either upward or downward—could be imminent.

Today, the pair is pressing against a critical juncture: the lower boundary of the pennant, which is aligning with a horizontal support level around the yellow area. So far, the reaction has been a modest bounce, showing that buyers are still defending this support zone.

How to interpret this technically?

  • A clear daily close below the yellow support area and the pennant's lower edge would activate a strong sell signal, opening the path for a downward continuation.
     

  • Alternatively, a rebound from this area and a rally toward the upper trendline—followed by a breakout to the upside—would provide a bullish signal and suggest a fresh move higher.
     

As the range tightens, the pair is likely to pick a direction soon. Traders should stay alert for any decisive price action near the boundaries of this formation.


 
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