Doubtle Top and a Divergence on the USD/CAD Chart

I am writing again about my favourite pair – USD/CAD.

I like it so much because its movements are so smooth and at the same time usually they are also very clear and predictable, which makes it easy to profit off of it. After all, that’s the purpose of all traders – to profit!
There was a powerful rally on Thursday and USD/CAD stopped at the resistance at 1.3150 (or to be more precise, its high was at 1.3153). On the 4-hour time frame it formed a very noticeable bearish formation – a bearish hammer as well as a hanging man candlestick, then fell with about 80 pips and then tested the high once more, even formed a new high at 1.3161.

All that said, you can easily notice that there is a visible divergence on the RSI indicator on most time frames, from 15-minutes to 4-hours. This is a screenshot of the 1-hour time frame.
These two indications – the double top and the divergence – are a clear signal that a correction is about to begin.

I will elaborate more on how deeply the pair could fall in a following post.