With top-tier reports lined up from both the U.S. and Canada, I’m thinking that USD/CAD could be due for a breakout sooner or later. Check out this triangle setup I’m watching!
As I’ve shared with y’all in my Comdoll Trading Kit for this week, I’m seeing a symmetrical triangle pattern on USD/CAD’s 4-hour time frame. Price is still stuck inside this chart formation for now so I’m thinking traders might be waiting for the jobs releases later today before pushing the pair in a particular direction.
It looks like market participants are bracing themselves for an upside NFP surprise since the ADP non-farm employment change report churned out a stronger than expected reading. To top it off, the jobs components of the ISM manufacturing and non-manufacturing surveys showed gains so the U.S. jobs market could be poised for a strong rebound.
Canada might be in for a positive reading as well since the Ivey PMI employment sub-index also showed a climb. However, the Loonie’s gains might still be limited because crude oil prices have been on a decline once more. In any case, I don’t want to let my biases get ahead of me in this setup so I’m looking at a straddle opportunity with USD/CAD.
I’ll be ready to buy if price moves past the 1.3100 major psychological level and short if price falls below the 1.2900 mark. This pair usually moves an average of 300 pips a week so I’ll set a stop loss of the same size. As for my target, I’ll aim for roughly 800 pips, which is the same height as the triangle formation. Of course I’ll be trailing my stop to lock in some pips along the way if price continues to show momentum.
I haven’t set any actual entry orders yet but I’m planning on doing so just before the U.S. market opens. I’ll keep y’all posted through my Twitter account so don’t forget to check out our risk disclosure if you’re following me!
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