Forex Trade Idea: Long-Term USD/CAD Uptrend

I’ve got a feeling that risk-off vibes are about to return to the forex market since OPEC leaders just won’t agree on production cuts. That’s why I’m looking to hop in this USD/CAD uptrend.

I’ve been watching the long-term ascending trend line on the pair’s daily forex chart for quite some time now, patiently waiting for a chance to catch a nice pullback. Applying the Fibonacci tool on the latest swing low and high shows that price is currently bouncing off the 50% level (just after Iran said that an oil production freeze is “illogical”) but a larger correction might still be possible with today’s FOMC minutes release.

USD/CAD Daily Forex Chart

USD/CAD Daily Forex Chart

I didn’t want to leave it all up to chance, though, so I entered half my usual position at market (1.3875) and set another buy limit order at 1.3575 near the 61.8% Fib and trend line. I’m keeping a wide stop below the trend line for this one and I’ve got my sights set on the previous highs near 1.4700.

I’m thinking that the lack of agreement among oil-producing nations could keep crude oil prices weak, thereby dragging the positively-correlated Loonie lower and weighing on overall market sentiment. As Forex Gump mentioned in a recent article on crude oil, the price slump is starting to weigh on the banking sector of some economies, as a number of these are exposed to energy sector loans.

Meanwhile, the lack of hawkishness among Fed officials might still weaken dollar demand during the release of the FOMC minutes, but this may have already been priced in a long way back when policymakers gave their thoughts on growth and inflation. With that, the Greenback might be due for a bounce at some point, especially if global growth concerns remain in play.

Here’s my plan:

Long USD/CAD at market (1.3875) for 0.25% risk, stop loss at 1.3175, PT at 1.4675.
Long USD/CAD at 1.3575 for 0.25% risk, stop loss at 1.3175, PT at 1.4675.

I’m going for a 1.15:1 return-on-risk for my first position and a possible 2.75:1 return-on-risk for my second position if it gets triggered. Of course I’ll be ready to close early if signs of a deal emerge among OPEC and non-OPEC nations, but that’s looking like a long stretch for now.

What do you guys think of my trade idea? As usual, I’d love to get your feedback on my setups and don’t forget to check out our risk disclosure if you’re joining me on this setup.

Cheers,

Happy time

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  • Bundypips

    Hi Happypip,
    I love reading your trade ideas and have been watching this particular set up myself for some time now. I was just wondering about your stop losses. You have them set at the 1.3175 level which as i read it is a 700 pip stop loss from 1.3875 and set at a price that the USD/CAD has not traded at since about the 07/11/2015. Do you always set your stops that wide? I am a newbie trader trying to learn the art of trading. i would love to hear your thoughts about the size of your stops as i have my sights firmly set on the USD/CAD.

    • Aww, thanks for checking out my blog! I’ve set a really wide stop for this one since I’m looking at the daily time frame and one that should give me a chance to cut my losses in case a strong downside break from the rising trend line takes place. Hope this helps!

  • Asindu T Priyadarshana

    hey happy pip,
    can you give your contact number please

    • Hey Asindu, I don’t usually give my contact number away but do feel free to get in touch with me here or through any of my social media accounts 😉

  • Sammy

    Hey Happy-pip,
    Good work done. Your analysis has really guided me well.
    Even I am bullish on USDCAD because of this continued rout in oil prices, which is not ending anytime soon. Though the production cut talks are going on between major oil producing nations, a step back by Saudi Arabia will trigger the selling in this already turmoiled commodity.
    The levels you suggested seem to be relevant to me which is stimulating me to put a trade on. 🙂

    • Thanks for the positive feedback! Unfortunately this pair ain’t looking too good at the moment and is already trying to break below that long-term trend line. Think it’s time to cut losses?

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