USDCAD: More bullish
Yesterday’s signals produced a losing short trade from the bearish rejection of the resistance level identified at 1.3213.
Today’s USD/CAD Signals
Risk 0.75% per trade.
Trades may only be taken between 8am London time and 5pm New York time today.
Long Trade Ideas
⦁ Go long after the next bullish price action rejection following the next touch of 1.3271 or 1.3251.
⦁ 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 1.3300, 1.3320, 1.3345, or 1.3359.
⦁ 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 although I was weakly bearish, I was not very confident in the potential for a major move down, and I wanted to see two consecutive hourly closes below 1.3200 during the London session before I would take a short trade. This was a good identification of the day’s pivotal point which was definitely 1.3200. The price has risen very strongly from there due mainly to new weakness in the Canadian Dollar, which came upon a dovish rate hint from the Bank of Canada.
The picture is much more bullish as the price has made new highs until failing to break above 1.3300 a short while ago. The area at about 1.3350 above has acted as long-term resistance, so it is likely to be a very pivotal area again if reached.
The problem with making any technical forecasts today is that we have major data for both currencies due which could push the price around in an unexpected way. However, if the price were to spike up following one of these releases to 1.3350 or higher, and then quickly start to move down strongly, that could provide a nice medium-term short trade opportunity, so I would take a bearish bias if that scenario plays out later.
Regarding the CAD, there will be a release of CPI (inflation) data at 1:30pm London time. Concerning the USD, there will be a release of FOMC Meeting Minutes at 7pm.