Buying USDCAD on a Dip into the Support Zone

It’s important to note that taking a look at the news calendar for the day today; we have limited, and lack of significant news for the day today during the US trading session. So, what we’re going to be looking for is a continuation of what we saw yesterday; buying USDCAD on dips. The market is jocking around a little bit, bouncing back and forth, but more overall what we’ll be looking for is the direction not to change really. It’ll just continue in the direction it’s been going in and nothing significant to alter the sentiment of the market let’s say here for the day today with a lack of any real news.

Looking here at the USDCAD, the daily timeframe. Of course, clearly it was in a downtrend underneath the red trend line. Was moving lower for quite a long time, several months, and now we’ve seen a little bit of a change of that trend pattern. Within that pattern of the trend, we had lower highs, lower lows. The black and red and blue boxes within the pattern show us the lower highs, and that the pattern basically continued for that several-month period, and most recently we’ve seen the break of that pattern, where it pushed above the resistance, the black box seized to continue lower, and it started moving back up again.

So, for the past week or so, we’ve seen some upward or bullish momentum here for the USDCAD. Let’s go ahead and zoom it in a little bit more here. The orange-shaded area here, down here towards the bottom of the chart. You see back here on the left-hand side support. So, let’s go ahead and put a black X there. Right, there is support. A little bit after that, several days after that, we saw support again into that same orange-shaded area, between 1.2950 and 1.2900 or 1.2895. Then you finally saw the breakdown of that orange-shaded area. It went underneath it and then found resistance at that same orange-shaded area.

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So, we saw support, support, resistance; it dipped back down, and now we see the market challenge there again. Now, a few days ago, we did find some resistance underneath it. Three days found some strength underneath it. But yesterday and today, sitting on top of that orange-shaded area. We discussed yesterday the potential of this being our support zone now. The orange-shaded area. In fact, yesterday, I placed a pending order buying USDCAD, and you could see it down here in the trade history.

This is the account history tab at the very bottom of the chart, and you could see there is the buy or long trade that I put on buying USDCAD at 1.2940. It got taken in. It got activated as a trade because this is the account history, and not too long after that it went up over 20 pips, came right back down, and took us out at break even. So, this ended up a breakeven trade, but it’s doing what we expected it to do. Dipped into the orange zone. Went back up. Dipped back down. So, what I’m looking for is continued support at the orange-shaded area.

Source: Forex Traders Daily