Let’s examine the USD/CAD currency pair on the H4 chart. The price is moving inside the bullish trend, which is confirmed by the long-term DonchianChannel(13) bias. Currently, there is a price pullback after a long period of the US dollar index strengthening.
Should we take this pullback seriously? Apparently we’d better should as the oscillator signal broke the local support level at 64.2045%, forming bearish divergence meanwhile the price kept moving upwards. We deem that the final price reversal is possible only after the level breakout at 1.26637, which is confirmed by the trend line and Parabolic historical values. This mark may be used for placing a pending sell order. On the other hand, the QE program launched in the EU will last for a few months, leaving open the possibility of continued depreciation of the Canadian dollar. Moreover, unemployment data will be reported in Canada today at 13:30 CET.
For this reason we reserve the right to go long, but still analyzing carefully the oscillator chart. Long position may be opened only after the oscillator bar returns above the support level at 64.2045%. It will confirm the divergence to be false and will give the green light for bulls. The local resistance level may be chosen for opening a pending buy order. After pending order placing, Stop loss is to be moved every four hours near the next fractal high (short position) or fractal low (long position), following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point.
|Buy stop||above 1.27660|
|Stop loss||below 1.26637|
|Sell stop||below 1.26637|
|Stop loss||above 1.27660|