USDCAD - Trade Idea - 16th July 2017

USDCAD has fallen off of a cliff and showing no sign of stopping immediately, but we could potentially see the bottom coming up for a reversal.

From a Monthly Timeframe perspective, price has been in a bullish trend, forming a higher high from the double bottom back in 2012.

As price is falling, a Higher Low could potentially be setting up, with price retracing around the 50% Fib zone which aligns with the 50EMA & 200EMA on the Monthly.

Price is approaching a point of strong support. If we break it down there are multiple key factors that would make this a place of reversal:

  1. Weekly Trendline support
  2. Weekly 200 EMA (which aligns with the ascending trendline)
  3. Weekly Support of 1.248

I want to zoom out and demonstrate why I have used 1.248 as a potential support level.

Zooming out, can see there has been multiple touches, as both resistance and support, although it's fairly close in range of 1.29000 I think this level makes sense when combined with the other points.

There's a couple of ways at looking at this pair.

We could see a bounce off of this support, which would be the Long Trade I would be looking for if decelleration and signs of reversal are shown.

From a longer term perspective, we could see 1.29000 tested as new resistance for a short continuation, or a break for a continuation of a bullish trend.

If price does fall down to 1.248, the 50% Fib retracement zone would align to 1.29000.

There is further development required, but I'll be looking for a Long Trade off of a reversal of 1.248.