A pullback on USD/CAD, finally! I’ve wanted to hop in this strong forex uptrend for so long but I couldn’t catch a good entry before. With this current retracement, I’m planning on going long USD/CAD at market:
As you can see from the chart above, the pair is testing the rising trend line and the Fib levels on the 1-hour time frame, getting ready to make a bounce and resume its climb. In addition, a bullish divergence can be seen as price made higher lows while stochastic drew lower lows.
Fundamentals suggest that the path of least resistance for this pair is to the upside, as the Fed is still sticking with its hawkish monetary policy bias while the BOC just recently surprised the markets with an interest rate cut. Major event risks for this trade include the NFP, Canadian jobs data, and Ivey PMI all up for release this week.
I’ll be going long at market (1.2575) since the divergence seems to be playing out already but I’ll have a wide stop below the next area of interest at the 1.2400 handle, which lines up with a Fib and trend line on a longer-term time frame. I’ll be aiming for the previous highs at 1.2800 as my first profit target but I plan on keeping the rest of the trade open and trailing my stop if price breaks past that area.
To sum up, here are the details: Long USD/CAD at 1.2575, SL at 1.2375, first PT at 1.2800. I’ll be risking 1% of my account on this trade.
What do you think of my forex trade idea?
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