USD/CAD Signal Update
Yesterday’s signals gave a long trade following the bullish rejection of the support level identified at 1.3031. It would be a good idea to take enough partial profits on the trade to make sure it cannot turn into a losing trade.
Today’s USD/CAD Signals
Risk 0.75% per trade.
Trades may only be taken before 5pm New York time today.
Long Trades
Long entry after the next bullish price action rejection following a first touch of 1.3031 or 1.3004.
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.
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 Trade 1
Short entry after the next bearish price action rejection following a first touch of 1.3188.
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.
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 “the area below at 1.3000 is very psychologically significant and is a real floor. If broken down, it would really confirm a long-term bearish trend. Alternatively, it may provide a long-term bullish reversal, so it should be a very interesting area for anyone trading this currency pair.”
The price did hold at 1.3031 but what concerns me is how long it is taking for the price to move up. This may be the beginning of a long-term bullish reversal, but another touch of the support or even 1.3000 seems like a more likely development over the short term. We probably have not seen a real bottom yet.
In any case, there are very major news announcements due later today which are likely to affect this pair, so we can expect high volatility.
Concerning the USD, there will be a release of CPI data at 1:30pm London time followed by a minor speech from the Chair of the Federal Reserve at 8pm. Regarding the CAD, there will be a release of the Bank of Canada’s Monetary Policy Report, Rate Statement and Monetary Policy Rate data at 3pm followed soon afterward by the usual press conference at 4:15pm.