USD/CAD Accumulates within Intraday Triangle

The accumulation phase of a market is identifiable by the sideways price action it travels in. More so, it's the tighter range that separates accumulation from the more volatile, wider ranging cycles known as distribution. Triangles will very often begin in a distribution cycle, as at the beginning of a triangle there is a wider range. Since symmetrical triangles are self-limiting they will eventually narrow down to a point where there is no longer any range for prices to travel within. At this point the market cycle is usually an accumulation cycle.



The 15 minute USD/CAD has come to just such a point within the Continuation Triangle. While the Initial Trend is still high, the prior trend was also a very strong downtrend that took the prices from just above 1.1700 to now gravitating around the 1.1200 area. This will have an impact on the pattern's Initial Trend reading as seen on the alert. Visually confirmed, the pattern though has been narrowing its trading range since the Wednesday Asian session. What's more interesting is what crude oil has been doing this week since it's managed to maintain support above the $60/barrel level. Stronger crude oil should normally strengthen the Canadian Dollar itself. However that has stopped as the USD/CAD bottomed out at 1.1134 as crude found a ceiling at 62.35.

The USD/CAD set up is a momentum play which currently is slightly favoring a break to the upside. The pattern should be watched for a break either way and this means that the breakout level would be 1.1194 but it would be better to wait for 1.1205. The breakdown level is currently 1.1134.

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