Back to the usdcad pair as this market is heavily influenced by the developments in the oil market. Considering 2015 so far was nothing but a bearish year for oil, the CAD was only normal to depreciate.
That being said, it is important to look at the pattern this market is forming and from my point of view we’re seeing nothing but corrective waves on all that move to the upside. However, there is still the need of a five waves structure and this means a wedge is possible to form here.
Mind the time frame though as we are on the daily chart and it means that the potential fourth wave here is taking quite some time and the fifth wave in this structure is almost always a triangle.
What I am trying to say is that lower oil prices are here to stay with us probably longer than the first half of 2016 and this trade is only for the 4th wave of a rising wedge.
Therefore, staying short with 1.3200 take profit and 1.3700 stop loss should be the right thing to do.
- See more at: http://www.forexnews.com/blog/2015/12/10/350000/#sthash.mfzR9O8E.dpuf