My trading belief is that when the price hits the certain range (USDCAD Avg Monthly Range = 300+ish pips), by default it should reverse minimum 60% of the recent move (some of you call it "a retracement") if not the entire move. Candle patterns that I look for in a way to confirm a reversal/retracement is on its way is Piercing Candles or Engulfing Candles. One of the rules I set is that the retracement/reversal bias upon hitting the trading range (in this case, Avg Monthly Range) remain true (the original upside target marked by the red 'X' on the chart) UNTIL one of these candles occurred to invalidate the bias (i.e a bullish retracement bias will be invalidated by a bearish engulfing/piercing candle)
The bearish engulfing candle occurred due to the Canadian inflation numbers. If the inflation numbers are that high, the expectation for the Bank of Canada to hike interest rate in September might as well be increased. Moreover, I've read news that the NAFTA deal can be sealed sometime this month which adds more reason to set the Canadian Loonie bias from Bearish to Bullish (BEARISH USDCAD)
The bearish engulfing candle occurred due to the Canadian inflation numbers. If the inflation numbers are that high, the expectation for the Bank of Canada to hike interest rate in September might as well be increased. Moreover, I've read news that the NAFTA deal can be sealed sometime this month which adds more reason to set the Canadian Loonie bias from Bearish to Bullish (BEARISH USDCAD)