USDCAD has formed a double top chart pattern on its 1-hour time frame, indicating that the uptrend is about to turn. Price has yet to break below the formation’s neckline near the 1.0900 major psychological support before confirming the selloff.

Stochastic is almost in the overbought zone already, which means that bears could jump in sooner or later. A break below the 1.0900 mark could lead to a drop of nearly a hundred pips, which is the same height as the chart pattern. Stronger selling pressure could take the pair down to the 1.0700 levels.

Shorting below 1.0900 with a tight stop and a target at 1.0800 could yield a good return on risk for a short-term trade.

By Kate Curtis from Trader’s Way.