USDCAD: Preparing To Make Another Push Towards 1.15
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 1.1364 around time of publication today.
Last time the pair was reviewed in the Ideas You Can Trade series, a support line was tested during a consolidation period within the uptrend. Since then the pair further consolidated before recovering back towards the upper resistance line of the widening bullish channel (point 4 in green on chart below).
USDCAD had since pulled back from that upper resistance line and now appears to be preparing to make another move higher towards that line, in what appears to be a repeating trend theme (similar to a slanted ascending staircase formation).
If the momentum of the last three trading sessions can continue then USDCAD may be heading steeply towards the upper resistance line of the widening bullish channel (point 4), whereas if such a steep continuation is not supported (i.e. if that steep line is breached) then the pullback could deepened before a recovery follows.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.1375 with a Limit to take profit @ 1.1414 and a stop-loss @ 1.1344 Risk/Reward Summary: Limit risk = +39 pips profit / (-31) Stop-loss risk = Gain to Loss ratio = 1.25
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.1301 with a Limit to take profit @ 1.1261 and a stop-loss @ 1.1340 Risk/Reward Summary: Limit risk = +40 pips profit / (-39) Stop-loss risk = Gain to Loss Ratio = 1.02
Medium term daily candle: