USDCAD: Consolidation between 1.3251 and 1.3345
Last Thursday’s signals were not triggered, as there was insufficiently bullish price action when 1.3286 was reached that day.
Today’s USD/CAD Signals
Risk 0.50% per trade.
Trades must be taken from 8am to 5pm New York time today only.
Long Trade Idea
- Go long after the next bullish price action rejection following the next touch of 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 of1.3345 or 1.3365.
- 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 although the picture was still weakly bullish, we were getting lower resistance at 1.3314 which was a bearish sign, as well as lower swing highs. This suggested that the direction was becoming less predictable and a period of consolidation was more likely to begin soon.
This was a good call, as we are getting this consolidation now. I also said I was still tilting towards the long side and that continues to look correct as commodity currencies remain under pressure in the current market environment.
The resistance levels at 1.3345 and 1.3365 are very crucial and a sustained break above them will be a very bullish sign.
I would be happy to find a long trade entry from a solid bullish bounce following another retracement to the support level at 1.3251 – I would take a bullish bias if this sets up later.
There is nothing of high importance due today concerning the CAD. Regarding the USD, there will be a release of Core Durable Goods Orders at 1:30pm London time.