After encountering resistance at 1.4000, the USD/CAD pair has been making lower highs and lower lows, and the pair is currently trading nearer to 1.3600.
1.3600 not only corresponds with a significant psychological handle but also with the top of a declining channel on the 4-hour time frame.
And the USD/CAD pair is showing a bearish divergence throughout!
If the USD sinks back down to the 1.3300 mid-channel area or even to its November lows, shorting at current levels would result in a good risk-to-reward ratio.
However, if USD/CAD continues to rise, you should also be prepared for an upside breakout that might return USD/CAD to its earlier inflection points of 1.3800 and 1.4000.
