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Aha! I’m seeing a bit more technical confirmation on a potential long USD/CAD position. What do you guys think of this pullback entry?

Long USD/CAD Idea

In my earlier trade post, I showed y’all a long-term ascending channel on the daily time frame of this pair, but I wasn’t sure where to hop in just yet.

Zooming in to the 4-hour chart revealed a double bottom pattern, and price just recently busted through the neckline resistance.

I’m more comfortable with trying to catch pullbacks instead of the actual breakout moves, so I’ve applied the Fib tool on the recent rally to spot potential entry levels.

USD/CAD 4-hour Forex Chart
USD/CAD 4-hour Forex Chart

The 38.2% to 50% levels span the broken neckline area, which might hold as support from here. Stochastic is still pointing down to indicate that there’s some bearish pressure left, but the oscillator is also dipping into the oversold region to reflect exhaustion.

Turning higher could confirm that buyers are ready to return and push USD/CAD back up to the swing high or higher. The reversal pattern is around 250 pips in height, so the resulting climb could be of at least the same size.

Besides, the top of the daily channel I was looking at is around the 1.3800 handle, so that could serve as my ultimate PT. Here’s my plan:

Long USD/CAD at 1.3375, stop loss at 1.3175, profit target at 1.3775 for a 2:1 play. I’ll adjust my stop to entry once price tests the swing high and roll it up higher when the pair reaches the 1.3600 area.

I’m Loonie bearish because the BOC just shifted to a less hawkish stance in their latest monetary policy announcement while mostly upbeat data could keep the U.S. on track with its tightening plans.

There are no major reports lined up from Canada this week while the U.S. still has its CPI figures due, so I’ll keep tabs on how those turn out.

What do you guys think?

Happy

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