2020.12.10 USDCAD Analysis
2020.12.10 USDCAD Idea
I typically report on CADUSD using the CME Practice Simulator to provide transparency, however, interest in my analysis of the USDCAD pair is growing amongst Canadian exporters.
Let’s take a look at the Weekly chart using OANDA.
As the weekly chart demonstrates, the USDCAD pair has made a significant move after breaking down out of consolidation at the .618 fib level.
Price is currently at the VWAP from the May 2013 low with the VWAP from the September 2012 low below.
Price has been moving inside a channel and will break out of it at some point.
The red rectangle is my best fit line of short-term support and probably has more significance on the Daily chart.
The weekly candle is on a red TD 6 which indicates that this move has 3 more weeks of downside.
Please note how the weekly red TD 6 has acted as a reversal candle in the past.
To summarize, the price:
has made a significant move,
is in an area of previous supply; and,
as is sitting at a significant VWAP with another VWAP just below it.
Using the weekly chart as my timeframe and trading style, I see two options:
Play a bounce from this VWAP with a stop under this candle.
Wait for a bounce to the area of the previous support with consolidation before entering a short position.
Now the Daily chart.
The Daily candle is on a red TD 8 sitting right at the VWAP from the May 2013 low.
Tomorrow’s candle should be a red TD 9 upon which time I look for a 1-4 candle reversal.
I have a downward wedge drawn, however, which you could also draw a couple different parallel channels.
Technical Analysis is more of an art than a science so what you draw and how you draw will depend on your beliefs about price action and patterns.
Regardless, at some point, the price will break out to the upside or the downside.
Be aware that the price could reverse at the confluence of the purple VWAP and the bottom trendline. Maybe tomorrow’s red TD 9 would make 3 cases for a reversal.
What options do I see for my timeframe and trading style?
Play a bounce to the 1.29743 ish level with a Long position and a stop beneath tomorrow’s low
Wait for consolidation and price confirmation.
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