Forex Video Briefing (12/1) – Trading the USD/CAD
The USD/CAD rallied sharply and the 2-3 session of bullish price action almost covered November’s entire range. This is indicative of a bullish continuation in addition to the fact that the prevailing trend is bullish as well.
The 1.1466 November high is also the 2014-high. The USD/CAD is starting the week retreating from this area. As price pulls back for the first time since the breakout, we should anticipate buyers on the dip based on the bullish continuation scenario.
the 1.1290-1.1325 area appears to contain a key support cluster that involves a previous support/resistance pivot area, and the 200-, 100-, and 50-period SMAs in the 4H chart. We should also anticipate buyers if the 4H RSI shows support around 40.
Let’s say we get an entry in at 1.1325. We might want to put a stop around 1.1275. That is a 50-pip risk to stop-loss. To the upside, the 1.1466 level is in sight, but let’s be conservative and say 1.1450. That is a 125-pip reward. The reward to risk ration, R:R, is 125:50, or 2.5:1.