Despite the reversal pattern>>> the USD/CAD pair formed another high before it started dropping.
Despite that, on the H4 time frame we could discern a figure that could be interpreted as a flag with some caveats. There has been a breakout and the pair has tested it before it reached 1.27778. That, in turn, allowed traders to open short positions from higher levels.
The limit of the trend channel (or the flag – whatever we call it we should be aware what would follow next) is around 180 pips from the breakout level. That means that if the pair reaches this limit it should drop to 1.2526.
It is too early to make a prognosis what will happen after that, but I think the main scenarios are two – a drop to test the local low at 1.24135 or a correction to the upside.
We should watch how the W1 candlestick will close, or even how the monthly one will close, although there is some time until that happens, in order to form a more long term prognosis.