Currently, USD/CAD is seen correcting. However, the daily trend of USD/CAD is still on a bullish track.

Hi fellow traders! USD/CAD is currently seen undergoing a correction from its bullish trend. Investors are waiting for a series of catalysts to be released this week. This caused the US Dollar Index to decline from its highest level. Nevertheless, investors remain optimistic about the Fed rate hike projection, allowing the greenback to shine again.

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Analysis and Recommendation

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

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From the H4 chart above, it has been pointed out that USD/CAD is currently undergoing a correction from its bullish trend. The corrective movement is expected to reach the demand zone around 1.3487 - 1.3430. Despite the correction, market optimism regarding the Fed rate hike projection is expected to make the dollar soar again. Therefore, look for buy-on-dips opportunities when the price moves around that demand zone.

Be aware if USD/CAD declines and breaks through the 1.3430 level! This is because the pair is expected to continue to correct towards a deeper demand zone around 1.3317 - 1.3245 if there is a confirmed breakout or bearish signal.

Here are two trading scenarios that can be prepared:

  • Therefore, set a long position at 1.387 when the price manages to enter the demand zone and a bullish signal confirms it. Stop loss may be positioned at 1.3430, while the profit target is at 1.3617.
  • Alternatively, set a short position at 1.3430 when a significant bearish signal confirms it in the supply zone. Stop loss may be positioned at 1.3487, while the profit target on 1.3317.

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:

  • Resistances: 1.3688, 1.3617
  • Supports: 1.3487, 1.3430, 1.3317, 1.3245