Timeframe: H4 Recommendation: Short Position
Entry Level: Short Position @ 1.1175
Hedge Level: Buy Stop Order @ 1.1250 (Take Profit Level @ 1.1375)
Take Profit Zone: 1.0925 – 1.0975
Stop Loss Level: 1.1250 (We will not use a stop loss order to close this trade for a loss and execute this trade as advised below). We do use stop loss orders to protect our profits and close a trade for a profit. Each trader may decide if and where they would like to place the order.
The USDCAD has rallied as visible in this 4-hour chart (H4). This currency pair is now trading near resistance which is marked by the light red box in the above chart. We expect the USDCAD to correct back down to its support zone which is marked in light blue in the above chart. This move would also result in a breakdown of its ascending support level and could signal a trend reversal from bullish to bearish.
MACD shows an overall corrective trend in momentum which has formed an imperfect negative divergence. RSI is trading in neutral territory after it broke down from overbought conditions and further signals weakness in the current uptrend.
We recommend a short position at 1.1175 with a potential second entry level at 1.1375. We also recommend a buy stop order at 1.1250 with a take profit target of 1.1375 in order to hedge our short position and before adding new short positions to this forex trade.
Traders who wish to exit this currency trade at a loss are advised to place their stop loss order at 1.1250. We will not use a stop loss order and execute this trade as recommended. Place your take profit order at 1.0975.
Here are the reasons why we call the USDCAD currency pair lower:
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