Last week, USD/CAD broke above a month-long consolidation channel. Let’s take a look at the 4H chart to follow this breakout and assess a bullish continuation trade idea.
The USD/CAD is in a bullish continuation mode, but is retreating from the November/2014 high at 1.1466. There is a support cluster at the 1.1290-1.1325 area. Let’s say we have an entry at 1.1325 and a stop at 1.1275. That is a 50-pip risk. Now, let’s have a conservative target, one that does not break above the Nov/2014 high even though a bullish continuation would suggest the break higher. A rally to 1.1450 still gives us 125 pips, and a reward to risk ratio of 2.5:1 for this trade.
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