USD/CAD Analysis
First things first: there is no doubt about it; we are in a strong uptrend. Anyone who has bought and held over the past months will have made or be sitting on some very nice profits. It is hard to trade this pair technically for short-term profit, so riding the trend has been the best strategy.
The monthly, weekly, daily, and H4 charts are all showing bullish engulfing patterns that have not been reversed. The only important questions to consider are good levels and timing for entries and taking profits on long trades.
FOMC Meeting
Tonight at 7pm London time we will see Ben Bernanke’s farewell statement to the market, in which he is expected to announce further tapering amount to a reduction of $10 billion in bond purchases. As this is so crucial to the market’s view of the USD, it is likely to move the market whatever he says. If there is an obvious long-entry beforehand it might be worth taking as if long USD is confirmed by what he says you could be well positioned then for a high reward. However, this is obviously high risk. If on the other hand his announcement drives this pair down, it could eventually reach a good price for a long entry.
Technical Analysis
As mentioned, the direction to trade is unambiguously long on every higher time frame. We have local resistance overhead at around 1.1175 but this could easily be broken. If it is, it could become a good level at which to search for a long entry. Better levels can be found at retraces to the following prices: 1.1031, 1.1018, 1.0928 and 1.0875, as justified by the daily chart below:
A good strategy is to wait for the price to reverse back to a long bias on the H4 chart after reaching one of these levels, and then looking for a breakout long entry on a shorter timeframe from there.
The final consideration should be how far this pair could go. There is no obvious technical resistance before 1.1500, but as this is a key round number it would probably be advisable to take some profit as price approaches close to that price.