USD dipped last week after failing to break above 1.11 the week before that. Price came down to 1.09 and even broke below that on strong CAN inflation data on Friday. However, the 1H chart shows us the V-shape reversal from this 1.09 level. We can also see below in the daily chart that the market is still bullish.
Now, let's first focus on the 1H chart for a buy-on-the dip strategy. In hindsight, putting in a long position around 1.09 would be optimal. It is conceivable and reasonable to buy from a rising trendline seen in the daily chart. However, let's say you missed that - I think there is still one more chance to buy, on a break above 1.10. A break above 1.10 should revive the bullish outlook back toward 1.11, with upside risk toward the 1.1278 high on the year.
USD/CAD 1H Chart
Let's say we get in at 1.1010. Now, the stop should be below some recent common lows. Let's put it below the most recent support pivot of 1.0945, ie. 1.0940. That gives us a 70-pip risk. The conservative target of 1.11 only yields a 90:70, or 1.28:1 reward to risk. However, can reasonably expect the target to be higher because we have an uptrend on our back. A target of 1.1278 gives us a 278 pip reward - which has a 278:70, almost a 4:1 reward to risk. An average between 4:1 and 1.28:1 gives us an acceptable reward to risk profile.
When we look at the daily chart, we should have the confidence of the uptrend on our back. After the past week's decline, USD/CAD fell to a rising trendlin and the cluster of 200-, 100-, and 50-day SMAs. If it is to remain bullish, it should rebound from these support factors, and the upside is 1.11, 1.12, and the 1.1289 high on the year.
USD/CAD Daily Chart 9/20
Recommended Content
Editors’ Picks
USD/JPY flat-lines below 151.50 after soft Japanese CPI data
USD/JPY stays defensive below 151.50 after the release of a soft Japan's CPI report and mixed Industrial Production and Retail Sales data on Friday. Japanese verbal intervention also weighs on the pair amid the holiday-thinned conditions on Good Friday. US PCE inflation awaited.
AUD/USD buyers lack vigor above 0.6500 amid Good Friday trading lull
AUD/USD is trading listlessly above 0.6500 in the Asian session amid light trading on Good Friday. The Aussie pair shrugs off encouraging comments from China's FX regulator, as price action remains subdued ahead of the US PCE inflation data.
Gold flirts with record highs above $2,230, all eyes on US PCE data
Gold price flirts with record highs around $2,230 during the Asian session on Friday. The uptick of yellow metal is bolstered by the safe-haven flows amidst growing economic concerns and the prospect of interest rate cuts from the US Federal Reserve.
Optimism price could fall as nearly $90 million worth of OP tokens is due flood markets
Optimism volatility has shrunk in the ours leading to the network’s cliff unlock. It joins the likes of dYdX and Sui, which have similar events on their calendars. As token unlocks are often considered bearish catalysts, investors should brace for a reaction after the event.
Will they won’t they cut rates is the question of Q2?
There has been some significant push back from Fed and Bank of England members around the timing of rate cuts, and the Bank of Japan still haven’t physically intervened in the FX market to stem yen weakness although they are threatening to do so.