USDCAD Bullish Reversal Setup – Double Bottom Pattern

USDCAD Bullish Reversal Setup – Double Bottom Pattern
Timeframe: 45-Minute
Instrument: USDCAD (U.S. Dollar / Canadian Dollar)
Date: May 4, 2025
Chart Pattern: Double Bottom
Bias: Bullish Reversal

🧠 Technical Breakdown:
This chart highlights a classic Double Bottom pattern, signaling a potential end to the recent downtrend and a shift toward bullish momentum.

🔹 1. Downtrend Context
Price has been in a sustained bearish trend, forming a series of lower highs and lower lows. A descending trendline has been drawn from the swing high to outline this declining structure.

🔍 Pattern Identification:
✅ Double Bottom Structure
Bottom 1: Formed near the 1.37709 level, establishing a clear support zone.

Retracement: Price moved higher from this level but faced resistance around 1.38599, failing to break through.

Bottom 2: Price returned to the same support at 1.3770, but showed buying interest again—confirming a potential double bottom (W-shape).

Neckline Resistance: The key horizontal resistance at 1.38599 acts as the neckline of this pattern.

The pattern confirms bullish potential only when price breaks and closes above the neckline.

📊 Trade Plan:
🔹 Entry Strategy
Breakout Entry: Traders may consider entering a long position on a confirmed breakout above 1.38599.

Retest Entry: A more conservative entry would wait for a breakout followed by a retest of the neckline as support before entering long.

🔹 Stop Loss (SL):
Logical SL placement is below the second bottom (1.3770), giving room to avoid fakeouts. This invalidates the setup if price returns below this zone.

🔹 Take Profit (TP):
TP1 (Intermediate): The breakout point (neckline) at 1.38599.

TP2 (Full Target): The projected price target based on the height of the pattern (neckline to bottom) is around 1.39404.

📐 Measured Move Target:
Height from support to neckline ≈ 89 pips → 1.38599 + 0.0089 ≈ 1.39404

💡 Trade Logic Summary:
Component Price Level
Entry Trigger Above 1.38599
Stop Loss (SL) Below 1.37709
Take Profit 1 1.38599
Take Profit 2 1.39404
Support Zone 1.3765–1.3775
Resistance 1.3855–1.3860

🧠 Technical Confluence:
Double Bottom: Reversal signal after downtrend.

Strong Support Zone: Validated twice with significant buying reaction.

Trendline Break: Indicates weakening bearish control.

Bullish Structure: Higher low potentially forming after second bottom.

📌 Risk-Reward Profile:
Entry above: 1.3860

SL below: 1.3770 → ~90 pips risk

Target: 1.3940 → ~80 pips reward

With scaling at TP1, this setup provides a reward-to-risk ratio of ~1:1 or better with careful management.