Forex: USD/CAD prints modified Hikkake at confluence of resistance

FXstreet.com (San Francisco) - After falling to 2-week lows and finding a base in the 0.9735 price zone, USDCAD is back trading around the 0.9795 mark ahead of the closing bell in New York.

Worthy of note, the mentioned price action follows a modified Hikkake pattern that was printed on the daily chart, which developed earlier in the week. On Wednesday, USDCAD broke above the 0.9850 resistance level after an inside bar formed on the previous day. On Thursday, price retreated and managed to close sharply lower to create a Hikkake pattern, a pattern that can signal trend reversals as well as continuations within a trend.

The pattern in question also formed in an area of dynamic resistance and within a bearish trend bias: The 55-day EMA at 0.9890 provided resistance, as did a descending trendline drawn from the peak of June 28 to that of July 25. The market is also printing lower highs and lower lows, all of which suggests that USDCAD may be poised for a deeper correction in the week ahead.

Hikkake patterns are common technical price action signals made popular by Daniel Chesler, CMT, founder of Chesler Analytics.