Bulls are strongly defending the support area which should result in a fast upside move for the USD/CAD.
Disclaimer: The analysis presented in this article is for educational purposes only and should not be considered as financial advice.
This analysis was done on MetaTrader 4.
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Trade Idea Details:
USD/CAD symbol on the MT4 platform
Type: Bullish
Key support levels: 1.3546, 1.3484
Key resistance levels:1.3685, 1.3761
Price Action:
On the 4-hour chart, we can see that USD/CAD has been going through quite a strong downtrend during the past two months. Price has reached the bottom at 1.3314 on June 10. Since then the price has been rising slowly while producing higher highs and higher lows.
Today USD/CAD has approached and rejected the uptrend trendline along with the 61.8% Fibonacci retracement level at 1.3573. While the price did go below this level, the daily closing was just above the Fibonacci support, confirming the rejection.
While the trendline and the Fibonacci support were rejected, it could be a confirmation that price is about to produce yet another wave up. The key resistance is seen at 1.3761 and is confirmed by two Fibonacci retracement levels. Firstly, we have 61.85 Fibs applied to the overall downtrend from the point of the last rejection of the downtrend trendline. Secondly, we have the 127.2% Fibs applied to the current corrective wave down. Another important factor is that the downtrend trendline also corresponds to the 1.3760 resistance area, making it a potential supply zone for the USD/CAD.
Potential Trade Idea:
The 1.3573 seems like a login buying price which is located exactly at a 61.8% Fibonacci retracement level and clearly corresponds to the uptrend trendline. The take profit could be placed near a major resistance, which is 1.3760. The stop loss could be placed just below the previously made low at 1.3483, which also provides a 1:2 risk/reward ratio.
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