On the weekly chart, USD/CAD is developing a structure that could have long-term implications. The dominant formation is a large head and shoulders pattern, marked with orange rectangles. This is not a minor setup. It is a multi-year structure that reflects distribution rather than short-term volatility.
The key level in this formation is the neckline, marked with a blue line. Importantly, this neckline is not just a horizontal reference. It also acts as a rising trendline connecting higher lows since 2023, which significantly increases its technical weight. Recently, price moved below this blue neckline, which formally constitutes a breakdown.
However, the character of the breakout matters. The move below the neckline was not accompanied by strong momentum or heightened volatility. Typically, when a weekly head and shoulders activates, the breakdown is aggressive and decisive. Here, the follow-through has been limited, and demand has shown up relatively quickly. That behavior weakens the immediate bearish case.
There is another crucial level just below current price action: the green support zone slightly above 1.35. This area is still holding and continues to act as a defensive barrier for buyers. As long as USD/CAD remains above this green support, the sentiment cannot be classified as fully bearish on a long-term basis.
In practical terms, the green zone around 1.35 is the last major stronghold for buyers. A weekly close below that level would confirm the head and shoulders structure in full and generate a proper long-term signal to go short. Until that happens, the breakdown remains incomplete, and caution is warranted.