USD/CAD Dead cat bounce

August 11, 2016 13:37

The USD/CAD has been dropping after a strong marubozu candle (highlighted in purple) breakout to the upside. At this point it is looking like a dead cat bounce. For all who are wondering what a dead cat bounce is there is an old adage saying that even a dead cat will bounce if it is dropped from high enough. In Forex if the strong rally is faded then we might assume a dead cat bounce. We can see that USD/CAD pair has countered a strong marubozu candle even stronger than its breakout and we can assume that the downtrend is in progress. POC (50.0, trend line, H3, EMA89) comes within 1.3075-95 zone and the price should face sellers if it gets there. If we see a deeper pullback next POC zone where now moment sellers are is POC2 (61.8,H4) 1.3120-30, and rejection should be valid. In both cases a sustained selling will get the pair down to 1.3020 followed by 1.2990. Only the breakout below 1.2990 will aim for 1.2920.

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