USDCAD: BoC cuts growth forecast; CAD much weaker
Yesterday’s signals were not triggered, as there was no bearish price action at any of the resistance levels which were reached.
Today’s USD/CAD Signals
Risk 0.75% per trade.
Trades may only be entered before 5pm New York time today.
Long Trade Ideas
Long entry after the next bullish price action rejection following the next touch of 1.3045 or 1.2962.
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 Trade Ideas
Go short after the next bearish price action rejection following the next touch of 1.3120 or 1.3177.
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 yesterday that it was impossible to make any directional call today as we had major central bank input for both the CAD and the USD which could push the price anywhere and was highly likely to produce high volatility. As such, I was looking to fade any sudden spikes to extreme support or resistance levels, ideally 1.2962 or 1.3177.
In fact, the longer-term support at 1.3045 which was reached on Tuesday served as a base for a strong upwards move caused by the relatively sharp weakening of the CAD yesterday caused by the Bank of Canada’s cut in its economic growth forecast.
This has created a more bullish picture in this currency pair, which is really notable as the USD was weakened somewhat last night by a slightly more hawkish than expected release from the U.S. Federal Reserve.
As such, the best opportunities here are likely to be on the long side, so I would take a weakly bullish bias if we get a bullish bounce at 1.3146 or 1.3120 later. However, the price may be slow to rise much above the round number at 1.3200 for the rest of this week – but there will be a release of Canadian GDP data today which could do something unpredictable to the price if the number turns out to be a surprise.
Concerning the CAD, there will be a release of GDP data at 12:30pm London time. Regarding the USD, there is nothing of high importance scheduled today.