USD/CAD Forex Signal - 25 April 2019

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Yesterday’s signals were not triggered, as there was no bearish price action at 1.3470.

Today’s USD/CAD Signals

Risk 0.75% per trade.

Trades must be entered before 5pm New York time today.

Long Trades

  • Go long after the next bullish price action rejection following the next touch of 1.3462 or 1.3402.
  • 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 ride.

Short Trades

  • Go short after the next bearish price action rejection following the next touch of 1.3529 or 1.3565.
  • 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 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.

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USD/CAD Analysis

I wrote yesterday that despite the price being close to significant new high prices it needed to break above 1.3470 or even 1.3500 or 1.3529 to become really bullish. I thought it was still a little early to enter any long momentum trades until we cleared this area, plus we had the crucial release from the Bank of Canada yesterday.

This was a good approach, as although the price made a bullish breakout above 1.3470, it sold off from the highs and has so far been unable to clear 1.3500 or 1.3529. If we get a strong close above 1.3529 today this would be a bullish sign, but the minor breakout above the multi-month range which we have seen over the past day looks in danger of reversing.

It is notable in the chart below how precisely the 1.3500 level is holding, we may see this price defended by an institutional option holder, so watch for a move down from here giving a potential short trade opportunity.

Fundamentally, the Bank of Canada’s input yesterday should support a further bullish move though – as they responded to a faltering economy by making it clear that any interest rate hike is very unlikely to happen in the foreseeable future.

I would take a bullish bias if the price can trade above 1.3529 on above-average volatility for a couple of hours later.

usdcad

There is nothing important due today concerning the CAD. Regarding the USD, there will be a release of Core Durable Goods Orders at 1:30pm London time.

Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U.K. Chartered Institute for Securities & Investment.