USDCAD: Bearish head & shoulders on weekly chart
Last Thursday’s signals produced a profitable short trade entry from the bearish reversal which happened at 1.3247. It would probably be a good idea to move the stop loss down and hold the trade in the hope that 1.3185 survives and that the support at 1.3151 will break down.
Today’s USD/CAD Signals
Risk 0.75% per trade.
Trades may only be taken prior to 5pm New York time today only.
Long Trade Ideas
Go long after the next bullish price action rejection following the next touch of 1.3151, 1.3120, or 1.3104.
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 run.
Short Trade Ideas
Go short after the next bearish price action rejection following the next touch of 1.3185 or 1.3247.
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 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 last Thursday that the technical picture had become much more bearish as the price was trading solidly below all its recent range. Another bearish sign was the new firm lower support levels. I was ready to take a bearish bias at a bearish reversal at any of the resistance levels which were reached before 1.3185 is reached.
This was an excellent call as my preferred scenario played out and gave a profitable short trade.
The technical picture is even more bearish, but bears face some obstacles as we have a cluster of three key support levels between 1.3100 and 1.3150. However, longer-term charts are showing an interesting bearish pattern with a “head & shoulders” which suggests that a break below a neckline near the large round number at 1.3000 will produce a continued strong downwards movement, so there are reasons to look towards the bearish side over the long-term also.
I would take a bearish bias today if there is a bearish reversal at 1.3185 before the price hits 1.3151, and I would exit at 1.3151.
There is nothing of high importance due today concerning either the CAD or the USD.