USD/CAD 1HR Analysis - Are We About to Break to the Upside?
USD/CAD had a fantastic bounce off of the bull channel bottom (1.36600) just below the 1HR 200EMA, leading to a 120 pip run to the top of the channel (1.37800). If you followed my last USD/CAD 1HR Analysis, this was the exact move I was after, which has now ended. Where do we go from here?
Key Points when considering a long:
1. We're at the top of a bull channel, very risky to long here as the probability of a breakout is statistically 10% and your stop loss should be at the bottom or below the channel. Not good Risk/Reward considering the probability, even with a small position.
2. The previous high resistance intersects perfectly with the top of the bull channel. Another indicator to wait on longing.
3. RSI is in overbought territory, a weak indicator, but supports the other data here.
4. The Weekly resistance may now be support. This previous bounce was rather convincing. We need to continue to see newer highs up to the high of the Weekly Bear channel at 1.40000. (See my USD/CAD Weekly analysis). The weekly support is 100 pips below us, best to wait until we get closer.
5. If you're long, take some profits, and wait for another entry toward the mid-range of the bull channel. Wait for a bull signal bar and confirmation bar that closes on or near its high. Preferably off of the 1HR 30EMA or 200EMA.
What about a short here?
I think a short on the 5-minute or 15-minute chart at this level can be reasonable. However, the macro trend is bullish, I would argue position size should be lower than your maximum, and your stop loss be placed just above the channel top. Shorting to the 1HR 30EMA or 200EMA is risky, but with the right trade management, it could render some profits. I argue to remain long and wait for that long entry, there is probably more upside than downside at this stage of the game since we've broken out of the Weekly bear channel.
As always, trade at your own risk, you are responsible for your trades. I hope this analysis was insightful and useful.
Trade wisely and let us know what you think in the comment section below!
Key Points when considering a long:
1. We're at the top of a bull channel, very risky to long here as the probability of a breakout is statistically 10% and your stop loss should be at the bottom or below the channel. Not good Risk/Reward considering the probability, even with a small position.
2. The previous high resistance intersects perfectly with the top of the bull channel. Another indicator to wait on longing.
3. RSI is in overbought territory, a weak indicator, but supports the other data here.
4. The Weekly resistance may now be support. This previous bounce was rather convincing. We need to continue to see newer highs up to the high of the Weekly Bear channel at 1.40000. (See my USD/CAD Weekly analysis). The weekly support is 100 pips below us, best to wait until we get closer.
5. If you're long, take some profits, and wait for another entry toward the mid-range of the bull channel. Wait for a bull signal bar and confirmation bar that closes on or near its high. Preferably off of the 1HR 30EMA or 200EMA.
What about a short here?
I think a short on the 5-minute or 15-minute chart at this level can be reasonable. However, the macro trend is bullish, I would argue position size should be lower than your maximum, and your stop loss be placed just above the channel top. Shorting to the 1HR 30EMA or 200EMA is risky, but with the right trade management, it could render some profits. I argue to remain long and wait for that long entry, there is probably more upside than downside at this stage of the game since we've broken out of the Weekly bear channel.
As always, trade at your own risk, you are responsible for your trades. I hope this analysis was insightful and useful.
Trade wisely and let us know what you think in the comment section below!
-Joe Dean
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