USD/CAD Price Analysis: Broadening formation and bullish extremes point to lower

• USD/CAD’s broadening formation on the daily chart is compelling.
• USD/CAD could be on the verge of a significant move lower.

USD/CAD has moved in on a monthly price imbalance to fill the void which raises the prospects of a move lower according to lower time frame broadening formations as illustrated in the following charts:

USD/CAD monthly chart

The wicks on the last few months not only represent a price extreme on lower time frames but have mitigated a price imbalance from the November 2020 supply. This leaves scope for a move to the downside for the foreseeable weeks and days ahead. 

USD/CAD daily chart

As illustrated above, the increasing price volatility can be shown as two diverging trend lines, one rising and one falling and here we have a broadening formation within another. The great areas are price imbalances that would be expected to be mitigated in time to come. The emphasis in the diagram above is to the downside with price exhaustion at the top of the expanding range and volatility and a void of price action to the downside.

The pivot points at 1.2837 and 1.2819 could be important for the days ahead. If they were to give way, then the focus will be on mitigation of the price imbalance from the bullish impulse. This leaves 1.26 the figure vulnerable for the days ahead. The pivots thereafter will be critical in defending against an expansion of the price below 1.2400.