USD/CAD has touched the top of its four hour trend-line and its confirming bearish momentum targeting 1.2850 area. The pair is overbought in the 4 hour timeframe and correlates with the weakening USDX. I am entering a short position at 1.305 with a stop loss of 20 pips and a take profit of roughly 200 pips giving us a 10:1 risk to reward ratio. My stop loss is short on this because the pair had so much upward momentum last week and I would rather get stopped out and try the sell again later rather than hold onto a losing trade. Bank of Canada Interest rate decision later this week will be a big mover as well as IVEY PMI, however other than these two events there is not much driving the Loonie. The United States has a ISM early in the week, followed by the ever popular NFP and FOMC speeches that happen the 1st week of every month. Beware the volatility these events can bring!
Comment
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I forgot to add USD crude oil inventories later in the week, known to be especially powerful with this pair.
Trade closed: stop reached
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Despite the American & Canadian markets being closed yesterday the dollars gains could not be stopped. The trend is broken. Lets allow the price action to retrace before entering a long position.