USD/CAD is in a bullish continuation scenario after today's (9/2) rally. The daily shows a bullish market based on:
1) Price is above the 200-, 100-, and 50-day simple moving averages (SMAs)
2) The RSI tagged 70 and then held above 40, showing bullish momentum.
3) Price bounced of a previous support pivot at 1.0814 and the 50-day SMA, showing bears are weak in this market.
The next immediate target is 1.0995 to 1.10, but above that we have the 1.1050 pivot then the 1.1278 high on the year in site.
USD/CAD Daily Chart:
BoC Ahead: This rally is occurring ahead of tomorrow's Bank of Canada monetary policy statement. The market is therefore pricing in a dovish tone, at least compared to what the FOMC would sound like. US data has been strong and could speed up the first rate hike. Canadian data has been unimpressive, but not too bad. Still, unless the BoC talks about raising rates, the USD/CAD should remain bullish.
Reward to Risk: Consdier buying at 1.09, with a stop below 1.08 ie. 1.0780. That would be a stop-loss of 120 pips. The target would be the 1.1278 high, which yields a potential reward of 378 pips. This yields a reward to risk ration (R:R) of 3.15:1, quite acceptable and attractive.
Don't Catch a Falling Knife: The thing is, if price does come down tomorrow toward 1.09, it might be prudent NOT to simply put on a position. If there is a strong CAD-reaction, and the USD/CAD is falling sharply, let it fall until it stalls, then consider buying. I might be lower than 1.09, but preferably not lower than 1.0860 because then USD/CAD has further downside risk in the short-term toward the 1.0814 low and maybe even the 1.08 handle.
1) Price is above the 200-, 100-, and 50-day simple moving averages (SMAs)
2) The RSI tagged 70 and then held above 40, showing bullish momentum.
3) Price bounced of a previous support pivot at 1.0814 and the 50-day SMA, showing bears are weak in this market.
The next immediate target is 1.0995 to 1.10, but above that we have the 1.1050 pivot then the 1.1278 high on the year in site.
USD/CAD Daily Chart:
BoC Ahead: This rally is occurring ahead of tomorrow's Bank of Canada monetary policy statement. The market is therefore pricing in a dovish tone, at least compared to what the FOMC would sound like. US data has been strong and could speed up the first rate hike. Canadian data has been unimpressive, but not too bad. Still, unless the BoC talks about raising rates, the USD/CAD should remain bullish.
Reward to Risk: Consdier buying at 1.09, with a stop below 1.08 ie. 1.0780. That would be a stop-loss of 120 pips. The target would be the 1.1278 high, which yields a potential reward of 378 pips. This yields a reward to risk ration (R:R) of 3.15:1, quite acceptable and attractive.
Don't Catch a Falling Knife: The thing is, if price does come down tomorrow toward 1.09, it might be prudent NOT to simply put on a position. If there is a strong CAD-reaction, and the USD/CAD is falling sharply, let it fall until it stalls, then consider buying. I might be lower than 1.09, but preferably not lower than 1.0860 because then USD/CAD has further downside risk in the short-term toward the 1.0814 low and maybe even the 1.08 handle.
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