USDCAD – Losing Steam As Prices Appear To Be Correcting In Context of Bullish Channel
The daily candle chart below shows the price history of United States Dollar (USD) against the Canadian Dollar (CAD), known as the USDCAD. This pair is trading at 1.1159 and just off session lows for the day, and down for the fourth straight day after failing to hold above 1.1277 last Thursday.
Last time this pair was covered in the Ideas You Can Trade series, in February, the bullish momentum had returned and caused USDCAD to surge higher, after it found support just above a medium term support line (point 8 in green on chart below).
A correction now appears underway as the pair looks like it’s preparing to make a pullback to where support may be sought back on the medium term bullish line just around 1.10.
If further correction to the downside can be averted, the pair could follow back up a short term bullish channel (similar to prior such lines, like point 2 in blue on the chart below), and make another attempt to pierce 1.1277 again.
Over the medium term the trend still looks strongly bullish for USDCAD, whereas the short-term correction appears bearish and indeed something that might just be short-lived, with the bullish momentum resuming thereafter.
Below are examples of how to trade a bearish continuation a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.1212 with a Limit to take profit @ 1.1257 and a stop-loss @ 1.1173 Risk/Reward Summary: Limit risk = +45 pips profit / (-39) Stop-loss risk = Gain to Loss ratio = 1.15
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.1147 with a Limit to take profit @ 1.1112 and a stop-loss @ 1.1178 Risk/Reward Summary: Limit risk = +35 pips profit / (-31) Stop-loss risk = Gain to Loss Ratio = 1.12
Medium term daily candle: