The USD/CAD 4H chart shows a failed pullback in the early part of the US session that was followed by an almost engulfing candlestick to the downside. This sets up a lower high, while corresponding RSI high is the same as the previous. This condition is known as a negative reversal. A swing projection is a conventional target for this signal, and it looks at 1.0030 level. If the same decline does materialize in the same speed, this will carry the market to a declining channelsupport.
The daily chart shows a pivot near the 1.0030 level, so there might be some support there. The clue to look for now for whether the downside break of the triangle will follow through is whether the RSI can be pushed below 40. This will reflect a loss of bullish momentum, and a higher likelihood of bearish continuation toward at least the next pivot near 0.9880-0.9890, where the 61.8% retracement resides as well. A more aggressive target could be the 0.9770 support area forconsolidation that occurred August into September of 2011.
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