USDCAD: May's Low near 108.12 tested with today's low, If this Fails next is lower
The daily candle chart below shows the price history of United States Dollar (USD) against the Canadian Dollar (CAD). This currency pair is known as USDCAD, and trading near 1.0816 around time of publication, and near session low's today.
USDCAD has been trading above a long term bullish resistance line (point 6 in dark green on chart below) since the beginning of 2014 when it was regained. This line has since provided support, and today has be breached to the downside, causing the USDCAD pair to test the low reached earlier in May. Last time USDCAD was reviewed in this series, support near 1.0850 was being tested again and failed, the same can now be underway near today's levels.
If that low from May coinciding near today's low of 1.0812 can provided enough support to bounce the pair higher again- as it has previously - then USDCAD has a chance to regain the bullish resistance line that it exited today and would mean this move is a false breakout. However, if 1.0800 fails, USDCAD should trade lower and could even follow a potential short term bearish continuation moving swiftly lower to find support on a parallel long term line closer to 1.0500 in coming weeks.
Below are examples of how to trade a bearish continuation a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.0851 with a Limit to take profit @ 1.0886 and a stop-loss @ 1.0823 Risk/Reward Summary: Limit risk = +35 pips profit / (-28) Stop-loss risk = Gain to Loss ratio = 1.25
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.0799 with a Limit to take profit @ 1.0769 and a stop-loss @ 1.0821 Risk/Reward Summary: Limit risk = +30 pips profit / (-22) Stop-loss risk = Gain to Loss Ratio = 1.36
Medium term daily candle:
Medium term daily candle chart zoomed in: