The USD/CAD Range Has Lasted for 7 Days. In Which Direction Will the Breakout Be?

The USD/CAD pair has been undecided for seven days now and has been moving in a relatively wide, slightly bullish range.

If we look at the candlesticks on the daily time frame we’ll see that they are either doji or spinning tops and none of them have succeeded in breaking above the (EMA)89  indicator (the green line). The range has formed between said (EMA)89 indicator and the middle line of the Bollinger Bands indicator and it very much reminds me of a bar formation that Al Brooks calls “barb wire”. The definition of “barb wire” is “three or more bars that overlap each other and one or more of them are doji”.

In this case I expect a move to the downside towards 1.2850 – 1.2800 due to the following principle: we can expect as big of a drop as the one that preceded the barbed wire formation. In this case the drop that preceded it was 285 pips, which means that 1.2850 is the likely target of the expected move to the downside.

Of course, there’s a possibility this scenario might not be valid, in which case the pair will climb towards 1.3280, which is a strong weekly resistance.