USDCAD: Support Reached Since Pullback From January 30th High Being Tested As Uptrend Attempts to Resume
The daily candle chart below shows the price history of United States Dollar (USD) against the Canadian Dollar (CAD). This currency pair is known as USDCAD, and is trading near 1.2450 around time of publication today.
Last time USDCAD was reviewed in Ideas You Can Trade, after a sharp move higher last month, the trend was described as bullish and a longer-term bullish resistance line was mentioned near 1.3049.
While that target remains, the pullback since the high reached last month near 1.2800 has brought USDCAD back to test a less-steep bullish support line (point 7 on chart below in white).
If support on this line continues then a higher-high should follow as the uptrend resumes, whereas if USDCAD fails to hold onto this bullish support then a return towards 1.2000 could unfold as the pullback resumes.
Below are examples of how to trade a bearish continuation or a bullish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.2545 with a Limit to take profit @ 1.2611 and a stop-loss @ 1.2483 Risk/Reward Summary: Limit risk = 66 pips profit / (-62) Stop-loss risk = Gain to Loss ratio = 1.06
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.2371 with a Limit to take profit @ 1.2267 and a stop-loss @ 1.2465 Risk/Reward Summary: Limit risk = 104 pips profit / (-94) Stop-loss risk = Gain to Loss Ratio = 1.10
Medium term daily candle: