As current USD/CAD movement does not reflect a clear direction, here is a scenario that can be taken when the current market condition is choppy.

Hi fellow traders! USD/CAD seems to have recorded another weakness yesterday (20/December). Despite the bullish daily trading bias, the pair is not yet moving in a clear direction. There are two trading scenarios that can be taken amidst the current choppy condition.

usdcad

 

Analysis and Recommendation

Let's take a look at the following USD/CAD H1 chart below: 

usdcad 2

USD/CAD is trying to rise up. Uncertain conditions and reduced volatility only moved this pair between the demand zone of 1.3585 – 1.3555 and the supply zone of 1.3670 – 1.3706. Seeing the lingering bullish potential, you can look forward to opening a long position in the demand zone.

An alternative short scenario can be taken if USD/CAD has formed a solid bearish movement. A short-term bearish phase is expected when the price breaks the 1.3555 level. After this level is passed, USD/CAD will continue to wear out towards the 1.3500 – 1.3463 demand zone.

  • Therefore, set a long position at 1.3585 when the price manages to enter the demand zone and a bullish signal confirms it. Stop loss may be positioned at 1.3555, while the profit target is at 1.3670.
  • Alternatively, set a short position at 1.3555 when a significant breakout signal confirms it. Stop loss may be positioned at 1.3585, while the profit target on 1.3500.

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: 1.3706, 1.3670
  • Support: 1.3585, 1.3555, 1.3500 (psychological level), 1.3463