USDCAD: Pullback testing 1.2150 as bearish pressure building and may look for bounce near 1.2000
The daily candle chart below shows the medium term price history of United States Dollar (USD) against the Canadian Dollar (CAD). This currency pair is known as USDCAD, and is trading near 1.2133 around time of publication - after just losing its hold on 1.2150 minutes ago.
USDCAD was last reviewed in mid-April in Ideas You Can Trade after it fell sharply and a newly emerging bearish channel was highlighted.
Since then that bearish channel brought USDCAD towards support on a longer-term bullish line (see green support line on chart below) which coincided just under 1.2000. After bouncing from that support line to just under 1.2600 earlier this month - today the pair is falling as USD-weakness continues.
While support is being tested on 1.2150 today -and just failed, if this line fails then 1.2000 looks like the next downside target where a reversal could occur. Whereas, if support holds on 1.2150 today then a brief bounce could follow from current prices before the downtrend resumes again. For now the trend seems bearish.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.2201 with a Limit to take profit @ 1.2250 and a stop-loss @ 1.2159 Risk/Reward Summary: Limit risk = 49 pips profit / (-42) Stop-loss risk = Gain to Loss ratio = 1.16
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.2145 with a Limit to take profit @ 1.2100 and a stop-loss @ 1.2189 Risk/Reward Summary: Limit risk = 45 pips profit / (-44) Stop-loss risk = Gain to Loss Ratio = 1.02
Medium term daily candle: