The USD CHF had given us a strong bearish signal to break Support of the large Daily Chart Pennant, only to disappoint by breaking out for a short distance before now being set to return inside the consolidation. With the USD CAD giving a similar, but bullish signal this week, will we see a similar pullback or a large profitable breakout?
USD CHF-DAILY CHART
There was an initial signal followed by a sharp U-turn then a brief breakout of only 140 pips-small in comparison to the size of the Pennant. It has now given a more convincing bullish reversal signal that looks to be the start of an uptrend. Similarly, the USD CAD has given a bullish signal to break out of smaller but significant Daily Chart Pennant, but has started to pullback.
USD CAD- DAILY CHART
So the question is, is this a genuine breakout or another example of false breakout? Looking at the 4H Charts on both pairs, we might get a clue as to whats in store for the loonie. The 4H breakout that coincided with the Daily bearish signal for the USD CHF had ended with a sharp candle which normally indicates that a trend or breakout is going to be followed by a pullback. This has also taken place on the USD CAD as well and could be an indicator of pending bearish reversal.
USD CHF- 4H CHART
USD CAD-4H CHART
On the other hand, breakouts from consolidation often have temporary pullbacks that ´test´ the Support or Resistance broken before resuming the breakout. This could be one such instance that leads to a bullish uptrend for the USD CAD.
Time will tell.
USD CHF-DAILY CHART
There was an initial signal followed by a sharp U-turn then a brief breakout of only 140 pips-small in comparison to the size of the Pennant. It has now given a more convincing bullish reversal signal that looks to be the start of an uptrend. Similarly, the USD CAD has given a bullish signal to break out of smaller but significant Daily Chart Pennant, but has started to pullback.
USD CAD- DAILY CHART
So the question is, is this a genuine breakout or another example of false breakout? Looking at the 4H Charts on both pairs, we might get a clue as to whats in store for the loonie. The 4H breakout that coincided with the Daily bearish signal for the USD CHF had ended with a sharp candle which normally indicates that a trend or breakout is going to be followed by a pullback. This has also taken place on the USD CAD as well and could be an indicator of pending bearish reversal.
USD CHF- 4H CHART
USD CAD-4H CHART
On the other hand, breakouts from consolidation often have temporary pullbacks that ´test´ the Support or Resistance broken before resuming the breakout. This could be one such instance that leads to a bullish uptrend for the USD CAD.
Time will tell.
