USDCAD: Bearish consolidation below 1.3225
Yesterday’s signals were not triggered as none of the key levels were ever reached.
Today’s USD/CAD Signals
Risk 0.75% per trade.
Trades may only be entered between 8am London time and 5pm New York time today.
Long Trade
Go long after the next touch of 1.3054.
Place 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.
Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.
Short Trades
Go short after the next bearish price action rejection following the next touch of 1.3250 or 1.3277.
Place 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.
Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to run.
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 although the price had been consolidating for many hours, there were no key support levels until 1.3054, so the line of least resistance was certainly down. If the USD weakened further or there are were more incidents or clashes in the Gulf, I would see this pair as very likely to move down further. I was ready to take a bearish bias here if the price retraced to the big psychological level at 1.3250 and made a strong failure and began to move down again.
Nothing much happened over the day, so the consolidation continued, but it is a bearish consolidation pattern. The technical picture is the same: the price is weak and looks like it is still very vulnerable to a strong bearish breakdown. I would take a bearish bias if we get a strong bearish failure at 1.3250 if the price breaks below its recent lows early in the New York session on above-average volatility.
There is nothing of high importance due today regarding the CAD. Concerning the USD, there will be a release of CB Consumer Confidence data at 3pm London time, followed by a speech on monetary policy from the Chair of the Federal Reserve at 6pm.