A two-month long descending channel has formed on the USD/CAD daily chart. It follows a rather strong bullish rally on this pair and is likely to result in an upward breakout. Its top edge fits rather roughly into the straight channel border, while the lower spikes are placed nicely along the lower border. Overall, the pattern looks to be legit enough to consider a trade.
Below, you can see the descending channel pattern marked on the USD/CAD chart. The yellow lines are the actual pattern’s borders. The cyan lines are the breakout levels for bullish (good trade) and bearish (not so good trade) breakouts. The green lines are profit targets in case of a triggered breakout. Stop-loss can be set on breakout bar’s low/high. You can click on the image below to see a full-sized screenshot of the current USD/CAD chart: Update 2012-08-08: Short position entered at 0.9952 with SL at 1.0015 and TP at 0.9776. Of course, the short position on descending channel is not what I was hoping for. Yet, it may still turn out to be profitable. Update 2012-09-12: With more than a month passed since opening, I have decided to post a small update on this trade. The position is still open. The take-profit level has been moved down to 0.9662 according to the down-slopping target line of the descending channel pattern. The stop-loss level has been moved down to 0.9918 — the next considerable resistance level on the daily chart. It also means that the stop-loss is already in profit, but I really look forward for the pair to hit a TP anywhere between now and 0.95 level. Update 2012-09-14: Take-profit level hit at 0.9651. USD/CAD would probably go even deeper, but the target line was hit and the pattern played out quite well. The reward/risk ratio for this position turned out to be 5, which I consider one of my most successful trades up to date. Good luck to all those traders who are still short on this pair.
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