USDCAD – Next Target for Support 1.0850 as Bearish Pressure Building
The daily candle chart below shows the price history of United States Dollar (USD) against the Canadian Dollar (CAD). This pair is known as USDCAD, and is trading near 1.0870 near session lows around time of publication today.
After making a lower-low for the third consecutive trading session, where support appears to have been building just above 1.0850, the pair touched 1.0866 just minutes ago and may be heading lower as the April low of 1.0856 is in the closest proximity in terms of a support targets within range for the current downward momentum.
Last time USDCAD was discussed in the Ideas You Can Trade series, support was faltering just below the 1.1000 level, and the trend was considered bearish, and since continued to make the April low discussed above.
While that low had provided the brief recovery that since followed, testing this level again could create either a double-bottom where support is validated and a bullish reversal occurs, or if that level fails a bearish continuation should follow - with the long term bullish support line (point 6 in dark green on chart below) as the next support target under 1.0850. Therefore, traders may be eyeing 1.0850 to decide on which way to anticipate the short term direction for USDCAD.
Below are examples of how to trade a bearish continuation a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.0901 with a Limit to take profit @ 1.0920 and a stop-loss @ 1.0882 Risk/Reward Summary: Limit risk = +19 pips profit / (-19) Stop-loss risk = Gain to Loss ratio = 1.00
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.0847 with a Limit to take profit @ 1.0821and a stop-loss @ 1.0869 Risk/Reward Summary: Limit risk = +26 pips profit / (-22) Stop-loss risk = Gain to Loss Ratio = 1.18
Medium term daily candle: