Today we analyze the USDCAD pair which in my opinion could offer a really good risk reward ratio in the coming few weeks.
Looking at this chart, there is a strong bearish momentum developing with oversold stochastics in the daily chart which is in confluence with major support lines in the weekly chart. In the lower time frames, there is bearish divergence which has formed in the 4HR chart. Any break blow the 4HR support trend line will probably signal a further down move especially if the next candle closes well below the current 1.3380. If it does, initiate a short in the 4HR chart and look to take your profits in the 1.328 zone which is the next strong support.
For long term traders, the way today’s candlestick closes will determine the short term trend. If price reverse and the weekly support line acts as resistance in the daily chart, we shall look to dump the USD and look to liquidate this position at 1.30 which would be our take profit zone. So, today we wait and see if there will be a confirmation for a double bar reversal.
Being a Monday, let’s watch out for price indices data from Canada and consumption and personal spending data from US. Both will be released at NY Open.
Otherwise, for day traders, look to sell at any highs in the next 4HR candlestick especially with overbought stochastics in the 15 min chart. This will be probably at today’s resistance at 1.34-1.341 and then trade as follows:
Sell Limit: 1.34-1.341
Stop Loss: 1.343
Take Profit: 1:3 Risk Reward ratio. For long term traders, sell and hold while trailing your profits with a suitable trailing stop.