USDCAD: Bounce From 1.2400 Sustaining Recovery and Again Keeping Pair Range-bound Under 1.2800 Level
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 1.2693 around time of publication today and near session highs just above 1.2700.
Last time USDCAD was reviewed in Ideas You Can Trade in late February, a bearish support line was breached but the expected bullish momentum failed to return and the pair subsequently resumed downwards. Since then, USDCAD has been range-bound between 1.2400 and 1.2800 in recent weeks, and building support mostly on the lower area of that range, and where it bounced higher from last week and moved towards current prices.
If the recovery of March 26th from 1.2400 continues, then USDCAD should reach for 1.2800 again before resistance is encountered, although short term bearish resistance (see point 5 in red on chart below) could develop lower - drawing a line from the March 11th high above 1.2800 towards today's high (indicating a possible reversal from here).
The current bullish line drawn from the low of three of the last four trading sessions (blue line under last 4 sessions) appears more significant than the short term bearish resistance - at least in the very short-term. Therefore, if this red resistance line is breached a push towards 1.2800 should follow, whereas a break under the blue bullish support line would be bearish.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.2705 with a Limit to take profit @ 1.2799 and a stop-loss @ 1.2611 Risk/Reward Summary: Limit risk = 94 pips profit / (-94) Stop-loss risk = Gain to Loss ratio = 1.00
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.2587 with a Limit to take profit @ 1.2521 and a stop-loss @ 1.2649 Risk/Reward Summary: Limit risk = 66 pips profit / (-62) Stop-loss risk = Gain to Loss Ratio = 1.06
Medium term daily candle: