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USD/CAD - Hitting Support In the Midst of a Strong Bearish Trend

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Direct from the desk of Dane Williams, exclusive to leofinance.io


Key Takeaways:

  • USD/CAD in the midst of a strong bearish trend.
  • Reaching weekly support zone which will show just how weak the pair is.
  • While my bias is to buy above support, I'm wary of catching a falling knife here.


USD/CAD Technical Analysis

One of the forex majors which I haven't covered on my forex market analysis blog since I switched formats, is USD/CAD.

The Loonie is in the midst of a massive, bearish trend on the higher time frame charts that you can see best on the weekly chart below.

USD/CAD Weekly:

From the peak in early 2020 when things were all starting to go to shit in terms of the global Covid-19 pandemic, it's been all downhill for the pair ever since.

But where price sits now on the higher time frame chart, means things are starting to get interesting from a day trading point of view.

I tossed up how to draw my daily support/resistance zones (which is never a good thing because we want them to be as obvious as possible so everyone is looking at the same thing), until settling on the above.

I went with this configuration because I'll always prioritise the most recent price action and as you can see, the 1.23 zone is drawn from the most recent V-shaped rejection.

We now have price coming down and retesting this zone again and it is a place that I'll be looking to trade around if the market provides.

Let's just let this one play out a little more first.



Support and Resistance Trading

Just a few extra thoughts on force support and resistance trading.

After mentioning at the top that I hadn't written a USD/CAD daily market analysis blog using my new format, I was inspired to go back and look at the last time I wrote something about the pair.

I had to scroll back 7 months ago, but the last time was this gloriously profitable USD/CAD trade showing how to let your winners run.

Depending on how aggressively you place your stops when trading my simple forex support and resistance trading strategy, that previous USD/CAD trade shows the huge risk:reward you can achieve by just letting your winners run.

When you're building your own trading strategy, I highly encourage you to try to incorporate ways to take advantage of potential home-run trades like that one.

Setups that offer +12 units profit while only taking 1 unit of risk, can make your entire trading month in a single setup.

As I commented on @belemo's blog yesterday, all you've gotta do is put yourself in a position to take advantage of these home run moves.

Are you?

Best of probabilities to you.



Data to Watch This Week:

  • FOMC Statement (USD)
  • FOMC Press Conference (USD)
  • Advance GDP q/q (USD)
  • GDP m/m (CAD)

Interesting to note that the Canadian GDP release comes a day after the US and is only rated as a second tier number.



Why not leave a comment and share a chart of your own in the comments section below? All comments that add something to the discussion will be upvoted.

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