Introduction:
Please read the full post before considering taking action.
This past month has been quite a ride for anyone involved in the forex markets. To an extent, it showcased the necessity of allying our technical analysis with a more proper assessment of the political landscape. While a stable market provides us with reasonably well-determined supply and demand zones for each currency, facilitating our job in forecasting zones of interest, the immediacy of moves caused by governmental agents' announcements sometimes blow it out of the water.
USD has been stumbling on Trump's decisions on his trade war with China. The USD is also strongly correlating with the stocks markets and, when feelings are bearish , the dollar suffers with it. A possible rate cut from the US also caused the markets to price it in, all the while oil prices have been moving the CAD due to their correlation nature.
Nevertheless, the charts have been showing us that technical analysis is still applying to this particular pair and we should play this wedge once more.
On the charts we see a wedge forming and slowly squeezing. That kind of formation usually implies smaller volatily with subsequential moves fueled by big momentum, so all attention here is required. Painted arrows indicate what we believe is the past of least resistance for USDCAD price to move through, while dotted arrows indicate what is likely to occur in the invalidation of this analysis.
How to Proceed:
Our team has already opened a long on the interaction with the lower trendline , and just opened another one. We also opened a hedge short here. Should the formation break, we will follow the plan highlighting the dotted arrows. Price, however, is reaching towards a zone of years high on a stable market, so attach a trailing stop (following your system) whenever in profit.
Take Profit:
Our main target is 1.355. That target, however, can be dynamically changed, i.e., according to live price action, should circumstances vary.
Stop-loss (Invalidation of Analysis):
Our stop-losses here, since swaps are neutral, are on the 1.33 level. However, since it is a big support, we could possibly keep the positions and add another long there, should price action confirm a reversal.
Risks Involved and Key Events to Tune Yourselves to:
A resolution on the US-China trade will certainly move the markets. Keeping track of a forex calendar is also of extreme importance here. Also, beware of oil news and its own price action
ETA on This Trade:
According to the ATR and for how long these waves play out, we are expecting to hold these positions for at least 2 weeks. It can take more or less time, depending on the market's reaction.
Side-notes:
Please keep in mind that the markets have been reacting strongly to news these days, which could further create instability. We are trading the whole forex system here, not only a pair. These positions should be watched closely.
Please leave your comments below to inspire us to continue our work and don't forget to follow us! Feel free to send us a direct message with any doubts you might have and experience a great trading session!
Please read the full post before considering taking action.
This past month has been quite a ride for anyone involved in the forex markets. To an extent, it showcased the necessity of allying our technical analysis with a more proper assessment of the political landscape. While a stable market provides us with reasonably well-determined supply and demand zones for each currency, facilitating our job in forecasting zones of interest, the immediacy of moves caused by governmental agents' announcements sometimes blow it out of the water.
USD has been stumbling on Trump's decisions on his trade war with China. The USD is also strongly correlating with the stocks markets and, when feelings are bearish , the dollar suffers with it. A possible rate cut from the US also caused the markets to price it in, all the while oil prices have been moving the CAD due to their correlation nature.
Nevertheless, the charts have been showing us that technical analysis is still applying to this particular pair and we should play this wedge once more.
On the charts we see a wedge forming and slowly squeezing. That kind of formation usually implies smaller volatily with subsequential moves fueled by big momentum, so all attention here is required. Painted arrows indicate what we believe is the past of least resistance for USDCAD price to move through, while dotted arrows indicate what is likely to occur in the invalidation of this analysis.
How to Proceed:
Our team has already opened a long on the interaction with the lower trendline , and just opened another one. We also opened a hedge short here. Should the formation break, we will follow the plan highlighting the dotted arrows. Price, however, is reaching towards a zone of years high on a stable market, so attach a trailing stop (following your system) whenever in profit.
Take Profit:
Our main target is 1.355. That target, however, can be dynamically changed, i.e., according to live price action, should circumstances vary.
Stop-loss (Invalidation of Analysis):
Our stop-losses here, since swaps are neutral, are on the 1.33 level. However, since it is a big support, we could possibly keep the positions and add another long there, should price action confirm a reversal.
Risks Involved and Key Events to Tune Yourselves to:
A resolution on the US-China trade will certainly move the markets. Keeping track of a forex calendar is also of extreme importance here. Also, beware of oil news and its own price action
ETA on This Trade:
According to the ATR and for how long these waves play out, we are expecting to hold these positions for at least 2 weeks. It can take more or less time, depending on the market's reaction.
Side-notes:
Please keep in mind that the markets have been reacting strongly to news these days, which could further create instability. We are trading the whole forex system here, not only a pair. These positions should be watched closely.
Please leave your comments below to inspire us to continue our work and don't forget to follow us! Feel free to send us a direct message with any doubts you might have and experience a great trading session!