Selling USDCAD down to 1,3450 level

Since the end of 2022, the USDCAD currency pair has been forming a specific type of the shelf pattern with a formed peak followed by a return of the price to the base of the figure. The pattern is also characterized by having double base, with the first one at the 1.3450 level and the second at 1.3150. This pattern is clearly visible on the weekly timeframe. According to the historic data of similar chart formations realization, there is a high probability that the price will break below the upper base at 1.3450 with a strong bearish candle and immediately drop to the 1.3150 level. However, for a better risk-to-reward ratio in such a trade, it is more rational to set the target at the 1.3150 level.

From a fundamental perspective, the Canadian dollar’s strength depends on a rise of global oil prices, as the country’s currency is closely linked to oil quotations. Canadian oil holds a significant share in US imports.

The rise in oil prices could be driven by easing trade tensions and positive developments in the economy of China, which is the world’s  largest consumer of oil. Additionally, if a sharp increase in oil prices occurs—as suggested by the characteristics of the chart pattern—the trigger could be an escalation or emergence of a geopolitical conflict. It would likely take place in regions where oil is produced or transported

Another possible scenario for the pattern is the formation of a series of right "shoulders" supported at the 1.3450 level. In this case, the USDCAD price would still reach this level. A move above 1.4060 would not invalidate the pattern scenario but would worsen the risk-to-reward ratio; therefore, if this happens, it is better to cut losses rather than hold the position.

The overall recommendation is to sell USDCAD

The profit should be fixed at the level of 1.3150. A Stop loss could be set at the level of 1.4060. 

The volume of the opened position should be set in such a way that the value of a possible loss, fixed with the help of a protective Stop loss order, is no more than 1% of your deposit funds.