USDCAD Second Put

Timeframe: D1                                                                                      Recommendation: Short Position
Entry Level: Short Position @ 1.0625
Hedge Level: Stop Buy Order @ 1.0725 (Take Profit Level @ 1.0800)
Take Profit Zone: 1.0400 – 1.0450
Stop Loss Level: 1.0750 (We will not use a stop loss order and execute this trade as advised below)
The USDCAD has rallied strongly as visible in this daily chart (D1). This currency pair has formed a rising wedge formation which is a reversal pattern and marked by red lines in the above chart. We expect the USDCAD to correct back down into its horizontal support zone which is marked in blue. The current horizontal support zone is a very important one as it used to be a strong resistance zone and heavy trading around those levels should be expected.
MACD shows strong momentum and formed a double top formation. We expect the histogram to start trading below its moving average once the correction is complete. RSI is trading in extreme overbought territory and a breakdown should initiate a stronger sell-off.
We recommend a short position at 1.0625 which would be an addition to our previous short position which we took on October 29th at 1.0450. We also recommend a stop buy order at 1.0725 with a take profit target of 1.0800 in order to hedge our short position and before adding new short positions to this trade.
Traders who wish to exit this currency trade at a loss are advised to place their stop loss order at 1.0750. We will not use a stop loss order and execute this trade as recommended. Place your take profit order at 1.0450.
Here are the reasons why we call the USDCAD currency pair lower:

• The USDCAD currency pair has formed a rising wedge formation which is a bearish chart pattern
• MACD shows strong momentum and formed a double top, but we expect a bearish histogram -moving average crossover
• RSI is trading in extreme overbought territory and a breakdown should initiate the sell-off
• Profit taking in order to realize trading profits which should add to bearish pressures
• New short positions by institutional swing traders

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