USDCAD – Support building as level tested again, if fails downside breakout will follow
The daily candle chart below shows the price history of United States Dollar (USD) against the Canadian Dollar (CAD), known as USDCAD currency pair. Today prices are trading at 1.0859 just near session lows of 1.0858, and very close to the support that has been building around 1.0850.
Last time USDCAD was covered in the ideas you can trade series, 1.0850 was the next target, and since then, further bearish price action caused the pair to test near 1.0800 where support was found on an intersecting long bullish support line (point 6 in dark green).
If 1.0850 is reached today, it will mark near the low of 5 of the last 10 trading sessions, this shows that it can either hold as a valid short term support level that could enable a strong reversal to follow, or that the continued bearish price action to test this level might trying to breakout to the downside.
Yet again, traders may be watching to see if this level fails to prevent further bearish price action, in order to decide which way to forecast USDCAD in the very short term, and the very long term bullish support line (point 6 in dark green) could be next if a bearish continuation happens.
Below are examples of how to trade a bearish continuation a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.0873 with a Limit to take profit @ 1.0901 and a stop-loss @ 1.0845 Risk/Reward Summary: Limit risk = +28 pips profit / (-28) Stop-loss risk = Gain to Loss ratio = 1.00
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.0844 with a Limit to take profit @ 1.0821 and a stop-loss @ 1.0864 Risk/Reward Summary: Limit risk = +23 pips profit / (-20) Stop-loss risk = Gain to Loss Ratio = 1.15
Medium term daily candle: