USDCAD – On the daily time frame, the pair closed with a bullish engulfing candle after 9 days of falls and bearish candles. Are the USDCAD bears exhausted? It definitely looks like some profit taking by the big boys before the end of the week.
How can we trade this bullish engulfing candle? We definitely want to go long on this pair instead of shorting it. Price have also closed above the S1 pivot point.
On the upside we can look at the support turned resistance at 1.29954 as the first take profit level (TP1). TP2 can be situated at the main pivot point (1.30433).
You can enter this trade if and when the pair retraces lower to at least half of the engulfing candle. Another way to enter this trade is to position an order to open a long trade a few pips above the high of the engulfing candle.
Stop loss can be positioned somewhere below the low of the engulfing candle. The risk reward ratio depends on where you enter and your take profit positions.
The Canadian dollar have so far benefited from the rise in the price of oil but we do not think that this will last very long. We view 1.30 as a level to target on the upside.
The Bank of Canada (BOC) and FED decision on interest rates of their country will have an impact on the USDCAD. It is likely that the BOC will keep rates on hold while we might see the Fed increasing rates. This will have an impact on the USDCAD to the upside.
To your success!
FX Strategist & Pro Trader
Pro Communitate. Ad Victoriam.
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