Earlier on, I highlighted a head and shoulders chart pattern forming on the USDCAD that signaled a potential trade happening. This is the part 3 of the USDCAD Head and Shoulders pattern lesson on the USDCAD.
USDCAD Daily Head and Shoulders Chart Pattern Price Target
The USDCAD has moved lower to hit the Fibonacci Expansion 100.0 target. Although there are a few lines on the attached chart, I’ll explain what they are.
- The thin magenta line represents the neckline of the head and shoulders pattern.
- The thin red lines with FE 61.8, FE 100.0 and FE 161.8 are the Fibonacci Expansion Targets.
- The thick magenta line represents the actual price target for the head and shoulders pattern. The distance from the neckline to the price target is the same distance from the top of the head to the neckline.
You can see how prices hit the FE 100.0 and bounce off that line.
A trader could have placed a order to exit part of their position there, and shift their stops to B/E or better. If price now retrace and take the stops out, then there would have been some profits in the bank. On the other hand, if the USDCAD continues dropping lower, then the trader could employ some sort of trailing stop.
Will the USDCAD hit the traditional price target for a head and shoulders pattern? We’ll have to wait and find out.
Waiting’s usually the toughest part of trading. 