We took a cautionary stance on USDCAD last week having booked profits on a short trade from downward bounce following a test of the large range top at 1.0250. We established conditions whereby if the pair closed below the upward-sloping trend line guiding price action mid-range, we would go short again. Our conditions were not met, and no trade was triggered.
Currently, price action has retraced from the trend line back to the range top at 1.0250. There are no candlestick signals here yet. Given the pair’s previous behavior at this level, our bias remains short. We will wait for confirmation of a close below resistance on today’s candle. Should this materialize, we will look to go short again towards the bottom of the range.
USD/CAD Strategy
1. Short USDCAD on a daily close below range top support at 1.0250.
2. Set stop-loss at 1.0384, above January’s false break wick high.
3. Monitor price action on a retrace to the trend line at 1.0100. Should trading stall here, take profit. On a break past the trend line, hold short to target 0.9835 near the range bottom.
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