USDCAD: Bullish retracement from new 4-month low
Last Thursday’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 must be taken before 5pm New York time today only.
Long Trade
Long entry after the next bullish price action rejection following the next touch of 1.3054.
Put 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 Trades
Short entry after the next bearish price action rejection following the next touch of 1.3153.
Put 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 last Thursday that the technical picture remained bearish, with only a relatively weak bullish retracement so far, and new lower resistance at 1.3153. I was ready to take a bearish bias on this currency pair if we had gotten a strong break below 1.3100 during the New York session on above-average volatility, or a firm bearish rejection of 1.3153. The price did break below 1.3100 and fell by another 40 pips, but the volatility was not especially high – but overall, I was right to be looking at the bearish side.
The U.S. Dollar has recovered quite firmly, but the bearish trend here is still arguably intact even as risk sentiment improves. This is because the Canadian Dollar, being linked to Crude Oil, tends to also strengthen as risk-on feelings boost the price of Crude Oil. As such, the CAD still seems to be the strongest currency against the USD.
Technically, the price almost reached the key support level at 1.3054 which has been long-term support.
If the USD starts to sell off again, I think the most reliable movement will be in this currency pair on the bearish side.
There is nothing of high importance due today regarding the CAD. Concerning the USD, there will be a release of ISM Manufacturing PMI data at 3pm London time.