USD/CAD Falling Wedge?

USD/CAD has rebounded on the H4 chart after reaching some dynamic support levels but is too early to say that we'll have a reversal. The pair has continued to drop in the short term even though the US inflation data came in better than expected in yesterday's session.

The CPI and the Core CPI rose by 0.2%, beating the 0.1% expected. Unfortunately, the Unemployment Claims increased from 716K to 853K jobs in the previous week, weakening the greenback.

USD/CAD has bounced off the 150% Fibonacci line but the bearish pressure remains high as long it stays below the black downtrend line. As you can see, the price has developed a potential Falling Wedge reversal pattern.

The pattern will be confirmed only if USD/CAD registers a valid breakout above the upside line and stabilizes above the Pivot Point (1.2854) static resistance. You should be careful because a new lower low, a bearish closure under the S1 (1.2700) confirms further downside movement.

Sell a bearish closure under 1.27 psychological level and a downside breakout from the Falling Wedge potential pattern. The S2 (1.2617) could be used as an immediate downside target.

Buy a valid breakout above the downtrend line and through 1.2854. This scenario will signal an increase to at least 1.30 psychological level.