Yesterday’s signals were not triggered, as there was insufficiently bearish price action when the anticipated resistance levels were reached.
Today’s USD/CAD Signals
Risk 0.75% per trade.
Trades may only be entered between 8am and 5pm New York time today.
Long Trades
- Go long after the next bullish price action rejection following a first touch of 1.2541 or 1.2522.
- Put the stop loss 1 pip below the local swing low.
- Adjust the stop loss to break even once the trade is 20 pips in profit.
- Remove 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to ride.
Short Trades
- Go short after the next bearish price action rejection following a first touch of 1.2702.
- Put the stop loss 1 pip above the local swing high.
- Adjust the stop loss to break even once the trade is 20 pips in profit.
- Remove 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to ride.
The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.
USD/CAD Analysis
Yesterday I thought that the most likely short-term move was downwards, but I did point out that “the printing of new support just below 1.2450 makes the picture a little more bullish, and increases the odds of a deeper bullish reversal with a break up beyond 1.2534.” This is what happened, and it was a fairly strong bullish reversal, breaking several resistance levels quickly, and the price is well established above 1.2500. If the price now remains above 1.2522, it will be a bullish sign pointing to a likely rise to the 1.2700 area, as there is no resistance within this gap-like area. There is a bearish trend but the signs suggest the price won’t be making another serious downwards movement for a while. The new weakness of the CAD probably has something to do with the fact that Crude Oil has reached $50 and may now be set for a fall, after already selling off by almost $2.
There is nothing due today concerning the CAD. Regarding the USD, there will be a release of the ADP Non-Farm Employment Change forecast at 1:15pm London time followed by Crude Oil Inventories at 3pm.