USD/CAD Price Analysis: Recovery takes shape of a rising wedge

• USD/CAD prints a rising wedge bearish reversal pattern on the hourly chart. 
• A breakdown would expose the recent low of 1.2928.

USD/CAD’s recovery from Monday’s low of 1.2928 to 1.3070 has taken the shape of a rising wedge pattern as per the hourly chart. 

A rising wedge comprises converging trendlines connecting higher highs and higher lows. The converging nature of trendlines indicates weak upside momentum. As such, a breakdown is considered a sign of bearish reversal. 

In this case, a breakdown would imply an en end of the corrective bounce from 1.2928 and open the doors for a re-test of that level. 

However, if the pair rises above the top end of the rising wedge, the bearish pattern would be negated, and further gains toward the descending 10-day simple moving average (SMA) at 1.3105 may be seen. 

That possibility cannot be ruled out, as the daily chart shows the pair closed above 1.3051 on Wednesday, confirming a bullish view put forward by Tuesday’s inside day candlestick pattern. 

Hourly chart

Trend: Cautiously bullish

Technical levels