Overview:

Two months ago, the ongoing bearish swing (initiated in March 2014) was hindered at the price level of 1.0620. This price level corresponded to the lower limit of the channel as well as the backside of a steeper bearish one.

In August, a bullish breakout off the movement channel took place. This enabled a bullish Flag pattern to be established. Bullish targets were successfully hit, including price level of 1.1230 and recently 1.1289.

Strong bullish momentum has been expressed for a couple of weeks. As mentioned before, breaching the price zone of 1.1230-1.1260 and fixation above it triggered new bullish swing.

Few days ago, the USD/CAD pair tested the upper limit of a steeper bullish channel depicted on the chart. This corresponded to price level of 1.1370. Bearish rejection was anticipated after such a long bullish swing.

Bearish correction occurred towards 1.1260 as expected. This is manifested in the resulting daily candlesticks which indicate strong bearish rejection around 1.1330-1.1350.

Recommendations:

The USD/CAD pair looked overbought on the daily chart. The bulls were pushing beyond the upper limit of the movement channel. Conservative traders were looking for short positions at such high prices as suggested.

Price zone of 1.1370-1.1390 was recommended as a valid SELL entry with SL located just above 1.1400. It's running in profits now.

On the other hand, a break below 1.1230 ( previous prominent top and 50% Fibonacci level ) indicates another SELL entry with higher risk. Initial targets are located at 1.1180-1.1160.