USDCAD: Steep trend within widening bullish channel as pair approaches prior resistance under 1.27 and 1.28
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 1.2557 around time of publication this Friday.
Last time USDCAD was last reviewed in Ideas You Can Trade was in the middle of last month when a sharp pullback brought the pair towards the lower line of the widening bullish channel (see point 8 in green on chart below). Since then the pair recovered up the channel and is now within a steep trend line that is making the overall trend more bullish and after regaining 1.2400 earlier this week.
Yesterday USDCAD almost hit 1.2700 where upside resistance exists, and which may be the next target along with 1.2800 - both levels near the upper line of the widening bullish channel, and levels that had acted as resistance in the first quarter of 2015. If the steep trend line is lost a pullback towards 1.2400 could precede a push towards 1.2700, whereas if the steep line is maintained the upside targets should be reached sooner.
With US Markets closed this Friday, and the weekend Greek referendum vote on Sunday - FX markets may be quiet today - but could gap on next weeks opening and therefore requires high caution especially for anyone holding positions through the weeks or with entry orders that could be triggered.
Below are examples of how to trade a bullish continuation or a bearish reversal:
1. BULLISH BUY ENTRY ORDER: Create a “Buy Entry Stop” @ 1.2571 with a Limit to take profit @ 1.2624 and a stop-loss @ 1.2521 Risk/Reward Summary: Limit risk = 53 pips profit / (-50) Stop-loss risk = Gain to Loss ratio = 1.06
2. BEARISH SELL ENTRY ORDER: Create a “Sell Entry Stop” @ 1.2528 with a Limit to take profit @ 1.2509 and a stop-loss @ 1.2147 Risk/Reward Summary: Limit risk = 19 pips profit / (-19) Stop-loss risk = Gain to Loss Ratio = 1.00
Medium term daily candle: