Yesterday’s signals produced a profitable short trade following the bearish near-pin candlestick rejecting the resistance level identified at 1.3047.
Today’s USD/CAD Signals
Risk 0.75% per trade.
Trades may only be entered between 8am London time and 5pm New York time, during the next 24-hour period.
Long Trades
* Go long after the next bullish price action rejection following the next touch of 1.2900 or 1.2826.
* 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 1.3047.
* 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 the most attractive strategy on this pair looks like being playing the range, looking for longs at 1.2826 and shorts at 1.3047. This would have worked out well, with the price strongly rejecting the resistance at 1.3047 yesterday and moving down from there with continuing bearish momentum. A test of 1.2900 looks likely to happen soon, and if the bears can drive the price below that round number, it would be a bearish sign. In the absence of a convincing long-term trend, playing the range between 1.2826 will most probably continue to be the best strategy available.
Regarding the CAD, there will be a release of Trade Balance data at 1:30pm London time. Concerning the USD, there will be a release of Crude Oil Inventories data later at 3:30pm.