USD/CAD Forex Signal

Last Thursday’s signals were not triggered as unfortunately the low was printed a pip or two above the support level identified at 1.3422.

Today’s USD/CAD Signals

Risk 0.75% per trade.

Trades may only be entered between 8am London time and 5pm New York time on Monday.

Long Trades

  • Go long after the next bullish price action rejection following the next touch of 1.3391 or 1.3357.

  • Place the stop loss 1 pip below the local swing low.

  • Adjust the stop loss to break even once the trade is 20 pips in profit.

  • Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to ride.

Short Trades

  • Go short after the next bearish price action rejection following the next touch of 1.3470 or 1.3529.

  • Place the stop loss 1 pip above the local swing high.

  • Adjust the stop loss to break even once the trade is 20 pips in profit.

  • Take off 50% of the position as profit when the trade is 20 pips in profit and leave the remainder of the position to ride.

The best method to identify a classic “price action reversal” is for an hourly candle to close, such as a pin bar, a doji, an outside or even just an engulfing candle with a higher close. You can exploit these levels or zones by watching the price action that occurs at the given levels.

I wrote last Thursday that the price was in a near 50-day bullish breakout above recent highs, and had some healthy momentum, so I only wanted to look for long trades here. I noted in support of this approach that the Canadian Dollar, along with the Australian Dollar, was one of the weakest major currencies right now. This was a good call as the major movement that day was bullish, with he price contained by both support and resistance levels nearby which I had accurately identified.

The price is now in a consolidation between those same two levels which are still holding, with perhaps a very slight short-term bearish bias at the time of writing. The price is likely to consolidate here unless the retail sales data due later is a major surprise, so the best approach would probably be to trade rejections of either level on short-term time frames while being very careful with risk and booking profits quickly. I have no directional bias, but if there were a strong bullish break, I think it would be likely to travel further than any bearish breakdown that we might get. A break above 1.3470 would be a bullish sign, but there is the psychological level at 1.3500 plus resistance just 30 pips past that which are likely to be difficult for the price to break beyond.

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There is nothing of high importance due today concerning the CAD. Regarding the USD, there will be a release of Retail Sales data at 1:30pm London time followed at 1:00am by a minor speech from the Chair of the Federal Reserve.