USD/CAD Forex Signal - 5 September 2019

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USDCAD: Bearish as BoC passes on rate cut

Yesterday’s signals were not triggered as unfortunately the price never quite reached the resistance level at 1.3345 and there was no bullish price action when support levels were hit either.

Today’s USD/CAD Signals

Risk 0.75% per trade.

Trades must 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 1.3185 or 1.3151.

  • 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

  • Short entry after the next bearish price action rejection following the next touch of 1.3229 or 1.3247.

  • 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.

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USD/CAD Analysis

I wrote yesterday that it was likely that the support level at 1.3308 would hold, so if the price completed its bearish retracement to that level and then gave a firm bullish bounce, I was be interested in taking a cautiously bullish bias. However, I noted that the Bank of Canada would be making its major monthly policy release on rates, so I was cautious of the unpredictable effect of that.

This was a good call as the support at 1.3308 held (it was not quite reached) until the Bank of Canada’s announcement that it would not be cutting its interest rate which sent the price falling very heavily as the Loonie strengthened.

The technical picture is now much more bearish as the price is trading solidly below all its recent range. Another bearish sign are the new firm lower support levels.

Despite the bearishness, it is worth noting that the support at 1.3185 and 1.3150 were very strong when the price was last in this area, so it may be hard for the price to fall much more.

A break below 1.3150 would be an extremely bearish sign.

I would take a bearish bias at a bearish reversal at any of the resistance levels which are reached before 1.3185 is reached.USDCADThere is nothing of high importance due today concerning the CAD. Regarding the USD, there will be a release of the ADP Non-Farm Employment Change at 1:15pm London time, followed by Crude Oil Inventories at 4pm.

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.