USDCAD: Push Above Upper line of Widening Channel Signals Steeper Bullish Trend
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 is trading near 1.1363 around time of publication today.
Last time USDCAD was reviewed in the Ideas You Can Trade series it was predicted to have exited a widening uptrend. However, that uptrend was larger than anticipated evidenced by the support eventually built under 1.0900 at the start of September and which helped the pair resume its upward momentum.
Since then the bullish trend has continued with the upper line of the channel pierced earlier today, signaling an even more bullish signal for USDCAD. If the pair remains above this upper resistance line of the bullish channel then 1.1400 may be the next resistance target, whereas if the channel is re-entered then a small pullback should follow down to 1.1250 and 1.1200.
The resistance overcome today also coincides with a 100% Fibonacci Retracement level from the March year-to-date (YTD) highs and up from low near 1.0600 reached in July (actual YTD low of 1.0587 reached on Jan 2nd). The longer term trend lines point to 1.1675 near the 161.8% Fibonacci retracement level based on the above mentioned retracement drawn on this chart.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.1379 with a Limit to take profit @ 1.1405 and a stop-loss @ 1.1356 Risk/Reward Summary: Limit risk = +26 pips profit / (-23) Stop-loss risk = Gain to Loss ratio = 1.13
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.1267 with a Limit to take profit @ 1.1239 and a stop-loss @ 1.1292 Risk/Reward Summary: Limit risk = +28 pips profit / (-25) Stop-loss risk = Gain to Loss Ratio = 1.12
Medium term daily candle:
Medium Term Daily Candle Zoomed out: