USD/CAD Intraday Technical Situation - Bullish micro-trend developing The pair has been progressing steadily inside a downtrend channel for over 2 weeks after on 19 June it breached the daily 1.0823-1.0946 range and dropped below its 200 period SMA. A Daily correction is still pending as the pair continued down this week in its intraday bearish channel and made a new low at 1.0659 on Fridays close. The current technical conditions highly favor a counter-trend position on a corrective wave, as a large array of important technical factors shifted to a bullish status: - A very significant bullish divergence has been identified on the MACD - SRPVA analysis suggests a high probability of a directional change - A Bullish P/V (Price/Volume) divergence has been identified - Stochastics has increased over level 20, signaling a potential exit from its oversold condition and a imminent correction - A reversal pattern has been identified in price action at the MS1 pivot level of 1.0659 and above its more significant S2 level of 1.0857 - The price action reversal is near the bearish channels support indicating a potential bounce-back - A intraday correction for the 1.0695-1.0658 wave is pending with a potential price increase up to the Fibo 38.2 level of 1.0681 which also represents the resistance of the bearish channel and can act as a profit taking area - Possibility to take advantage of a favorable Risk/Reward ratio for the trade Our suggestion is a low volume long position at the current market price with a stop loss located below the Fibo 100.0 level (preferably set a stop loss at 1.0655) and a profit target at 1.0680. Besides being a high probability scenario, the setup provides a optimal risk/reward ratio of 1:1.5 (10 pips stop loss, 15 pips take profit). The setup can be observed in detail in the chart below. We are looking forward to your questions and feedback. If you are interested in a professional managed accounts solution or Forex signals, contact me for more details.
Posted on: Sat, 28 Jun 2014 21:30:27 +0000
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