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USD/CAD Tightrope Act at Risk

USD/CAD Tightrope Act at Risk

2017-11-21 16:17:00
Paul Robinson, Strategist
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Read the fundamental outlook for USD/CAD in our DailyFX Trading Guides.

USD/CAD is at serious risk of breaking the trend-line off the September low, as it continues to test the line repeatedly without any meaningful lift. The more it keeps hammering away at it the more likely it is to fail. The rising channel since the 11/10 low is taking on the shape of a ‘bear-flag’. Further adding weight on the top-side is the trend-line running down off the May swing-high. With the two trend-lines converging on one another a resolution is likely to occur soon. A 4-hr closing candle below the Sep trend-line puts the trade into motion.

Should a breakdown occur, a move above today’s high at 12837 will invalidate the trade and also constitute a break of the May trend-line as well. It is possible USD/CAD continues to hold onto the line and make another swing higher before breaking down, in which case the stop would have to be adjusted. However, if the trade is to trigger it seems unlikely the May line will be breached with any vigor.

On the downside, first up will be the 11/10 low at 12666, but looking for a lower-low into the 12590s as the next level of meaningful support followed by the 2012 trend-line which was broken and recaptured during September. In October we saw this t-line used as support, so despite it having little meaning the month prior is still viewed as a potential source of support. It lies just above 12500.

Check out these tips for Building Confidence in Trading.

USD/CAD: Daily

USD/CAD Tightrope Act at Risk

4-hr

USD/CAD Tightrope Act at Risk

Trade Parameters:

Trigger: 4-hr closing candle below September trend-line

Stop: Above today’s swing-high or most recent swing-high if another push higher develops first

Targets: 12590 & 2012 t-line ~12505 (Limits placed 15-20 pips above)

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---Written by Paul Robinson, Market Analyst

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You can follow Paul on Twitter at @PaulRobinonFX.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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