USD/CAD bounced off that long-term floor I was watching, but I’m a bit late to the game since I chickened out of setting orders just before the FOMC decision!
USD/CAD Trade Setup
In my watchlist blog post, I highlighted this major area of interest around 1.3100-1.3200 that coincided with the ascending channel support visible on the daily time frame. The techs lined up really well but I hesitated to go long at market or set entry orders, knowing that the FOMC statement could cause quite a ruckus among dollar pairs.
As it turned out, the Fed seemed a tad more hawkish than expected, projecting three interest rate hikes next year versus their September estimate of just two increases. This encouraged dollar bulls to charge, especially since the FOMC also upgraded their growth and employment projections for 2017.
Now that I’ve gotten some bullish confirmation from the long green candle off support and stochastic pulling out of the oversold region, I went long at market with a small position and a stop below the channel support and previous candle low. I’ll be ready to add to my position on a short-term pullback and I’m setting my sights on the previous highs near the 1.3600 mark.
Asian session traders and market watchers from London have yet to react to the Fed’s announcement so I’m thinking the dollar has room to go higher. There are still several top-tier reports lined up from the U.S., namely its CPI, initial jobless claims, and flash manufacturing PMI, so strong figures could reinforce the Fed’s upbeat outlook. As for the Loonie, Canada’s manufacturing sales report is due and BOC Governor Poloz has a speech scheduled.
Here’s what I have:
Long USD/CAD at 1.3315 (0.25% risk), stop loss at 1.3025, profit target at 1.3575.
I’ll be on the lookout for opportunities to add on a pullback in order to get a better R:R on this one. Make sure you check out our risk disclosure if you’re trading this one, too!
See also: Q3 2016 Trading Performance Review
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