USD/CAD continues to rise and rally because it is still supported by the prospect of the Fed's interest rate hike.
Hi fellow traders! USD/CAD was observed to have recorded a gain at the close of yesterday's trading (21/February). The US dollar continued to climb as investors hoped for further interest rate hikes. As a result, USD/CAD advanced and maintained its bullish daily bias.
Analysis and Recommendation
Let's take a look at the following USD/CAD H4 chart below:
Based on the H4 chart above, it has been pointed out that USD/CAD is being corrected from its bullish rally. The corrective movement is expected towards the demand zone around 1.3470 – 1.3420. Even though it is being corrected, the USD/CAD bullish trend will continue. That way, buy on dips when prices move around the demand zone.
However, be aware if the corrective movement continues to penetrate the 1.3420 level since USD/CAD will carry on its corrective phase towards a deeper demand zone if there is a confirmed breakout.
Here are two trading scenarios that can be prepared:
- Therefore, set a long position at 1.3470 when the price manages to enter the demand zone and a bullish signal confirms it. Stop loss may be positioned at 1.3420, while the profit target is at 1.3590.
- Alternatively, set a short position at 1.3420 when a significant breakout signal confirms it. Stop loss may be positioned at 1.3470, while the profit target on 1.3320.
Keep in mind to always use risk and money management before trading! In addition, to make use of trailing stops, don't forget to exit the market as soon as you find a reversal signal!
USD/CAD key levels:
- Resistance: 1.3645, 1.3590
- Support: 1.3470, 1.3420, 1.3320, 1.3240