Free Profitable Forex Newsletter
Hey! This is Philip with this week's trade idea of the Free Profitable Forex Newsletter!
Potential Long USDCAD Trade Ahead!
Our short EURJPY trade from our last newsletter has avoided getting stopped out by only a few pips. The pair is now moving down, the trade is still on, and we are still looking EURJPY to fall toward 119.80 and 118.80 targets we noted last week.
Turning to this week’s events, trading has been busy and price action confusing. Out of all, the Bank of Canada meeting was the biggest surprise probably, hence below we are taking a look at a potential USDCAD trade that could be triggered in the next few trading days.
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Without any further ado, let’s get into the technical analysis and a trading plan for how we can make an entry on the intraday charts, which will allow us to place a tighter stop.
Switching to the 4-hour chart, we can see the large bullish spike from yesterday, and also that USDCAD has already started a retracement (that currently looks like a bull flag formation).
We will probably get a clearer outlook for USDCAD’s direction by the end of this week (after the Canadian GDP, US NFP and all the remaining data is released). But, until then it’s difficult to guess whether USDCAD will continue higher or reverse lower (although bullish continuation looks more probable from the current perspective).
In this sense, a clear bullish breakout of the flag formation will be the signal to enter long. In this case, we can place a tighter stop as per such a pattern. Assuming, things do actually unfold in such a scenario, then USDCAD shouldn’t move below 1.3130 and this can be used as a stop out level.
Technically, from the higher timeframes (such as daily & weekly), the highs around the 1.3350 area look appropriate as a target for the pair next week.
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- wait for bullish confirmation as described above
Stop loss:
- look to place a tighter stop as described above
Target:
The surprising dovishness in the Bank of Canada statement and economic outlook yesterday seems to have carved out a bottom in the USDCAD currency pair. On the other hand, the US Fed was rather hawkish as they signaled further rate cuts won’t be coming this year. Such divergence between the two central banks suggests that the USDCAD pair should be moving in USD’s favor (higher).
However, as you probably already know, this week is jam-packed with a number of crucial market-moving economic reports. Today and tomorrow won’t be any different. Therefore, that is why we need to be patient before chasing USDCAD higher form current levels.
Busy trading far from over this week - Data will need to be on USD side for USDCAD to continue smoothly higher
Namely, Canadian GDP data was released today, and tomorrow the US unemployment, NFP, and wage growth data will be out.
Additionally, around the European close tomorrow, the ISM PMI Manufacturing index will be reported from the US. This report, although not as notorious as the NFP, can inject significant volatility and start/reverse currency trends should there be large deviations in the actual release from the consensus forecasts.
The reports this week will need to be in favor of the USD for USDCAD to move higher. Everything being equal, without any large deviations from the consensus forecasts, USDCAD should continue to move higher next week.
Today’s slightly weaker than expected Canadian GDP also favors this direction in USDCAD.
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Trade signals from the past week
- October 25, 2019 - Short EURJPY from 120.75 (still in progress)
TOTAL: 0 pips in the past week
TOTAL: +1995 pips profit since October 1, 2018
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Any opinions, news, research, predictions, analyses, prices or other information contained in this newsletter is provided as general market commentary and does not constitute investment advice. FX Trading Revolution will not accept liability for any loss or damage including, without limitation, to any loss of profit which may arise directly or indirectly from use of or reliance on such information.
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