Friday Update – CAD $ Positions

*A quick update of this weeks CAD $ price action and how I will trade next week*

Happy Friday to you all. I hope you are well and you survived the UK general elections! In this blog post I am going to give you an update on my Canadian Dollar positions, how CAD $ has moved this week and what I think it will do next week.

If you haven’t seen my previous market analysis on the Canadian Dollar then please click on the link below to read Monday’s blog post.

https://diaryofafinancekid.com/2019/12/09/fx-market-analysis-the-canadian-dollar-december-19/

Let’s start with USDCAD FX currency pair. In this instance, I am shorting this currency pair in order to sell USD to buy Canadian dollars.

USDCAD 4 hour timeframe chart

My original plan for this week was to sell USDCAD on the pullbacks and I achieved this fairly soon. Monday produced a nice entry on the retests and rejections of the intraday support/resistance zone at 1.32650 shown in the coloured zone. This was my first short position of the week for USDCAD and I am looking to hold this trade position as price makes its way down to the weekly price support at 1.30500.

On Tuesday price had broken down through the 4hr 50 EMA and a lower high was clear to see on the chart. I then entered a 2nd short position at 1.32412 on the daily pivot level. There was a nice sell off through Monday afternoon followed by some good consolidation so I took this pause in price action as a sell signal and managed to catch the next sell off.

USDCAD daily timeframe chart

The daily timeframe chart shows some nice sell side momentum this week and the prevailing trend still looks nice and bearish to me. Lower highs and the monthly lows being broken this week show signs of more downside to come.

I will not be entering any more short positions until I see the monthly lows of 1.31580 properly broken and new lower lows made. I will then await a pullback and sell the net lower highs if they tick my strategy rules.

Let’s look at the other FX currency pair I am using to trade my bullish bias on CAD $.

CADJPY 4 hour timeframe chart

CADJPY shows a similar situation to USDCAD but obviously the trend is bullish because I am buying CAD $ as the base currency.

The reason I chose JPY as the counter is purely for the fact that it was showing the cleanest set up on the higher timeframes. The bullish trend waves on the daily and 4hr timeframe charts were very easy to spot and were reacting well with fibonacci retracement levels and the trendlines I had drawn on.

There were multiple entry points on the 4hr chart for good reward:risk long positions. My initial entry was based on the daily timeframe trend chart but there was also the break and retest of the 4hr counter trendline (black arrow 2) and then the next consecutive higher low and trendline bounce (black arrow 3).

CADJPY daily timeframe chart

This week has seen 4 consecutive bullish daily candle closures which is exactly what I predicted and wanted to see. Today is also looking very bullish with my profit target 1 being smashed through.

My higher timeframe analysis can be seen on the chart above and I am looking for a new weekly higher high to be made now. The trend is bullish and price action and momentum is bullish so there should be no problems with CAD $ reaching 84.500 against the yen.

Future Price Predictions & Trading Opportunities:

CADJPY i will be keen to buy any future dips in price on the 4hr intraday charts. I will use trendlines, support/resistance levels and fib to look for good reward:risk opportunities to buy in on this weekly bullish trend.

The chart below shows some potential ideas for where price might go in the later stages of this week/early next week but I won’t know until it happens.

USDCAD is a little tricker because there is less room between current price and my higher timeframe profit target. I don’t want to be greedy and get to involved with scaling in to as many positions as possible.

USDCAD 4 hour timeframe chart

From where price is now, I believe it will pop up to the 4hr bearish trendline I have drawn on the chart above. A lower higher here should see price go down to new 4hr lower lows and the support at 1.30500 next week. If this happens, I will not scale in to another short position at the trendline because the intraday support at 1.31650 has still held strong. This limits my probability of a good R:R trade.

My preferable scenario is for price to break down through the current support zone, make a new lower low at 1.31150 (TP1 on chart) and then pullback into the support/resistance zone shown. From there I will look to sell USDCAD once more down to my final profit target.

Useful Links:

All my technical analysis is done using the TradingView platform. You can get access via the link below.

https://tradingview.go2cloud.org/SH3bP

My preferred broker of choice is IC Markets. Low spreads and trading costs really help long term profitability. A link to their site is below.

https://www.icmarkets.com/?camp=38537

Thanks for reading and please don’t forget to LIKE, SHARE and FOLLOW my blog to stay up to date with the latest market analysis and trading education posts.

DISCLAIMER: None of the information posted on this site is to be considered investment/financial advice. Trading is high risk and you should only trade with money you can afford to lose.

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