USDCAD: Two Steep Support Lines Lost as Pair Pulls-back Towards 1.2400 Following USD Weakness
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 1.2450 around time of publication today - and is lower following worst-than-expected US retail sales figures.
Last time USDCAD was reviewed in Ideas You Can Trade the pair was barely hanging on a steep bullish support line (point 7 in white on chart below), and an even steeper trend line (point 2 below in blue) was also helping the overall bullish momentum.
However, since failing - by just a few pips - to reach 1.27 earlier this week, USDCAD has since lost both of the above-mentioned support lines, and is now retracing back towards 1.2380 - which may be the next downside target.
Unless the bullish support lines are regained, if 1.2380 fails then the short-term bearish continuation (point 1 in magenta) may resume - with a trajectory towards 1.20 by early March.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.2539 with a Limit to take profit @ 1.2630 and a stop-loss @ 1.2470 Risk/Reward Summary: Limit risk = +91 pips profit / (-69) Stop-loss risk = Gain to Loss ratio = 1.31
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.2419 with a Limit to take profit @ 1.2369 and a stop-loss @ 1.2464 Risk/Reward Summary: Limit risk = +50 pips profit / (-45) Stop-loss risk = Gain to Loss Ratio = 1.11
Medium term daily candle: