Expanding Consolidation:
USD/CAD has been essentially in an expanding consolidation since August. We saw higher highs and lower lows without direction. The prevailing trend before this consolidation was bullish, so there is a slight bullish bias. As price pushes above 1.10, it is making another new high. Is this a bullish continuation, or will the consolidation continue?
Trade Adjustment:
I would put my money on the bullish outlook, simply because that is in the direction of the trend, and the pattern of higher highs and lower lows is is getting obvious. Still, as price consolidates around 1.10, those who went long might consider taking profit, or scaling out the long position.
USD/CAD - Buy at 1.0930
USD/CAD 4H chart 9/10
Trade Idea:
If there is a dip, we can also consider buying or adding to our reduced long positions. If the market has turned bullish, the next target is 1.1050, and there should be support in the 1.09-1.0925 area. Here we have the central pivot of the consolidation range, and the cluster of the 200-, 100-, and 50-period simple moving averages in the 4H chart, which are clustered together, showing consolidation mode. Therefore, a hold above these SMAs would be the next phase in the bullish development.
Stop-Loss:
A break below 1.09 suggests the USD/CAD market is either still in consolidation, or might even be putting in a price top. So, we can put a stop-loss at let's say 1.0870. An entry at 1.0920 would yield a 50-pip risk.
Reward:
As we noted, there is upside risk toward 1.1050, which is a resistance back in April. The entry at 1.0920 yields a 130-pip potential reward.
The reward to risk ratio is 130:50, or 2.6:1.
USD/CAD has been essentially in an expanding consolidation since August. We saw higher highs and lower lows without direction. The prevailing trend before this consolidation was bullish, so there is a slight bullish bias. As price pushes above 1.10, it is making another new high. Is this a bullish continuation, or will the consolidation continue?
Trade Adjustment:
I would put my money on the bullish outlook, simply because that is in the direction of the trend, and the pattern of higher highs and lower lows is is getting obvious. Still, as price consolidates around 1.10, those who went long might consider taking profit, or scaling out the long position.
USD/CAD - Buy at 1.0930
USD/CAD 4H chart 9/10
Trade Idea:
If there is a dip, we can also consider buying or adding to our reduced long positions. If the market has turned bullish, the next target is 1.1050, and there should be support in the 1.09-1.0925 area. Here we have the central pivot of the consolidation range, and the cluster of the 200-, 100-, and 50-period simple moving averages in the 4H chart, which are clustered together, showing consolidation mode. Therefore, a hold above these SMAs would be the next phase in the bullish development.
Stop-Loss:
A break below 1.09 suggests the USD/CAD market is either still in consolidation, or might even be putting in a price top. So, we can put a stop-loss at let's say 1.0870. An entry at 1.0920 would yield a 50-pip risk.
Reward:
As we noted, there is upside risk toward 1.1050, which is a resistance back in April. The entry at 1.0920 yields a 130-pip potential reward.
The reward to risk ratio is 130:50, or 2.6:1.
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