The US dollar is pushing lower against the Canadian dollar, following an early week ramp in the USDCAD that quickly faded out just shy of the psychologically important 1.4000 resistance level.
Signs of a major price top are in if we consider that a huge one-day reversal candle has form. The reversal candle could be the start of a major decline of the next few weeks for the USDCAD.
News of OPEC+ cuts of 2 million barrels of oil per day is positive for oil prices. This is even more reason why we are likely to see the Canadian dollar rising as its value is closely linked to oil prices.
Should we see a further decline in oil production from the next OPEC+ meeting it would be further bullish for the Canadian dollar currency and therefore it could weigh on the USDCAD. Hence why a price top could be in.
With the above in mind we should mindful that an important price top could have also formed in the US dollar index. The GBP and EUR currencies are quickly rallying against the buck today.
High levels of negative sentiment are still being seen towards the USDCAD pair, with some 70 percent of traders currently holding a negative view towards the USDCAD pair.
This large bearish sentiment bias probably hints that a minor upside price correction could happen as retail are typically on the wrong side of the trade.
USDCAD Short-Term Technical Analysis
The USDCAD pair has formed an inverse head and shoulders pattern, and the neckline of the head and shoulders pattern is only invalidated if the 1.3500 support level is broke.
According to technical analysis we could be close to putting in a price top soon. And a final thrust higher looks to have been the test of 1.4000, and the reversal now begins.
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USDCAD Medium-Term Technical Analysis
The USDCAD pair is likely to have put in a large one-day reversal candle. The doji shaped price candle and near 300-point one day reversal are all bearish price signs for the USDCAD pair.
A large head and shoulders pattern could also be forming, but only if the price starts to drop towards the technically important 1.3500 level.
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