Before Wednesday’s FOMC statement, USDCAD started showing supply signs above a strong zone. On the FOMC’s statement release, there was a rally, but the prices quickly tumbled, forming what we call an ‘upthrust’, on very high volume. This is what we know to be of a good breakout sign, and breakouts can be traded when it occurs.
The trade was closed after a VSA demand signal from H4, with a narrow range bar behind already showing demand coming in the market.
Right now, the market is approaching the previous zone at 1.315, and we can see VSA showing further supply, with the background still being weak. If the line drawn at 1.311 is broken (which coincides with the latest low), it’s a good confirmation to short the market. As of now, the market is rallying, and it will still have to prove the recent supply is enough to start a major turn. Other way to confirm it, is to wait for the dynamic trend to turn down.