Buying USD/CAD on a Dip
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
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
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