Yesterday’s signals produced a good long trade following the bullish engulfing candlestick which rejected the support level at 1.2530. The trade is in profit and would still be open.
Today’s USD/CAD Signals
Risk 0.75% per trade.
Trades may only be taken until 5pm New York time today.
Long Trade
* Go long after the next bullish price action rejection following the next touch of 1.2530.
* Place the stop loss 1 pip below the local swing low.
* Move 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 Trade
* Go short after the next bearish price action rejection following the next touch of 1.2669.
* Place the stop loss 1 pip above the local swing high.
* Move 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
I wrote yesterday that if the price continues to fall and move strongly down to 1.2530 before rebounding, we might have a decent long trade entry which has cleared out the stops below 1.2620. This is exactly what happened, and all the signs are that the trade has a good chance to move further into profit. The area around 1.2620 has provided minor resistance recently, and the resistance there could strengthen as it now becomes more confluent with a medium-term bearish trend line, as shown in the price below. If the price falter there, it would logically be time for at least a partial exit from the long trade. If the price just keeps going past the trend line, it would be a bullish sign. I have a weak bullish bias below 1.2620. However – there is major data due later from the Bank of Canada, which could push the price anywhere, so it would be wise to book profits before the release on any open trade.
Concerning the CAD, there will be a release of the Bank of Canada’s Monetary Policy Report, Rate Statement, and Overnight Rate at 3pm London time. Regarding the USD, there will be a release of Crude Oil Inventories data at 3:30pm. The Bank of Canada will be holding a press conference at 4:15pm.