Short-term Forex Range Play on USD/CAD

After seeing my homegirl Happypip doing well with USD/CAD, I thought I’d jump in the action as well. ¬†Will the strong support around 1.2400 continue to hold?

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USD/CAD 1 Hour Forex Chart

USD/CAD 1 Hour Forex Chart

I’m taking a simple range play on USD/CAD as the pair has stayed between 1.2400 – 1.2600 throughout February. Fed Chair Janet Yellen’s testimony to the Senate yesterday kicked the Greenback lower after she set the expectation of no rate hikes for at least a couple of more Fed meetings, bringing USD/CAD back down to the 1.2400 area.

It looks like 1.2400 has drawn in buyers once again, and with support holding, I decided to play it with a small position. I think the catalyst for success could be the upcoming Canadian CPI data which has been giving us lower reads over the past couple of releases. My stop will be the weekly ATR to give it room to breath, (but I’ll likely close it down manually if the CPI data doesn’t go my way), and my target is the top of range. Here’s what I’m doing:

Long half position USD/CAD at market (1.2445), stop at 1.2245, profit target at 1.2645

Remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t follow what I do. Risk Disclosure.

I’m only risking 0.50% of my account on this one, and with this trade structure, I have a potential reward-to-risk ratio of about 1:1. Of course, anything can happen in the forex markets, so if the story changes I’ll be sure to reassess and adjust quickly if necessary. Stay tuned by following me on Twitter and Facebook!