As US Dollar is in corrective mode, USD/CAD is now trading in the neutral zone. Use trading opportunities after the price has successfully tested the nearest supply or demand zone.

Hi all fellow traders! USD/CAD is being corrected because  US Dollar is wearing out due to the absence of supporting catalysts. Even so, USD/CAD still has the potential to create trading opportunities when it successfully tests the nearest supply zone or demand zone.

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Analysis and Recommendation

Let's take a look at the following USD/CAD H4 chart below: 

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Based on the H4 chart above, it has been pointed out that USD/CAD is in a corrective mode amid its neutral bias. Due to the absence of apparent bias, two trading scenarios can be tried this time. That way, the main scenario is to wait for short opportunities when the price approaches the supply zone. When this analysis was written, USD/CAD exceeded the supply zone of 1.3436 – 1.3490.

As an alternative scenario, the price will fall to test the demand zone around 1.3330 – 1.3282 if the supply zone test fails. Long opportunities can be taken when the price approaches the demand zone. 

Here are two trading scenarios that can be prepared:

  • Therefore, set a short position at 1.3436 when the price manages to enter the supply zone and a bearish signal confirms it. Stop loss may be positioned at 1.3490, while the profit target is at 1.3330.
  • Alternatively, set a long position at 1.3330 when a significant bullish signal confirms it in the demand zone. Stop loss may be positioned at 1.3282, while the profit target on 1.3436.

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: 1.3490, 1.3436
  • Support: 1.3330, 1.3282