OIL The Main Driver for USDCAD! A Potential Short Trade
Updated
Oil is the Main driver of the CAD pair at the moment and has been for the long time. OIL after slipping from the highs the previous is now on the track of recovery. This recovery can be observed in the technical picture as well as the fundamental picture itself. OPEC and NON OPEC countries have largely agreed to cut the OIL production. To support this argument further the US CRUDE stock pile in the last few readings have been reducing. Furthermore the USD is not that strong too at the moment as trade war fears and FED getting pressured are driving the USD low.
Now as we discussed the Fundamental picture of this trade lets get into the technical aspects of it. first of all lets break down this trade by being able to see the bigger picture. Have a look at the picture below representing the MOnthly charts of USDCAD
it shows the price has clearly rejected the long term trendline and seemed to be headed down for now. NOw looking into it deeper we can focus on the weekly charts (see the next image below)
the weekly charts clearly display a long term ascending trendline that has been rejected and the price is now focused on testing the lower trendline of the channel. But however in the way we have a weekly 50 EMA which can most often act as dynamic resistance and support. And there our main take profit target would be set at this EMA rather than the lower end of the channel. however in the future if the conditions meet right we can take this pair further short to the lower end of the channel.
And now finally have a look at the main chart. its the daily chart. it shows the channel that was developing was breached together with the daily 50 EMA which is a strong confluence factor in our trade. apparently the lower end of the channel that is present on the daily chart is also the same level of the WEEKLY 50 EMA which also happens to be our initial target.
Every condition has been met for us to go SHORT on this trade however to get a better risk to reward ratio it will be better to wait for this pair to slightly retrace to around 1.33200 level before we take it short. it may happen today or by tomorrow. anyhow i will update the entry criteria and sl and tp levels in the comment below soon
cheers and happy trading
Now as we discussed the Fundamental picture of this trade lets get into the technical aspects of it. first of all lets break down this trade by being able to see the bigger picture. Have a look at the picture below representing the MOnthly charts of USDCAD
it shows the price has clearly rejected the long term trendline and seemed to be headed down for now. NOw looking into it deeper we can focus on the weekly charts (see the next image below)
the weekly charts clearly display a long term ascending trendline that has been rejected and the price is now focused on testing the lower trendline of the channel. But however in the way we have a weekly 50 EMA which can most often act as dynamic resistance and support. And there our main take profit target would be set at this EMA rather than the lower end of the channel. however in the future if the conditions meet right we can take this pair further short to the lower end of the channel.
And now finally have a look at the main chart. its the daily chart. it shows the channel that was developing was breached together with the daily 50 EMA which is a strong confluence factor in our trade. apparently the lower end of the channel that is present on the daily chart is also the same level of the WEEKLY 50 EMA which also happens to be our initial target.
Every condition has been met for us to go SHORT on this trade however to get a better risk to reward ratio it will be better to wait for this pair to slightly retrace to around 1.33200 level before we take it short. it may happen today or by tomorrow. anyhow i will update the entry criteria and sl and tp levels in the comment below soon
cheers and happy trading
Note
THE RSI on the 4 hour charts is in oversold territory. its advisable to wait for the price to slighlty retrace before taking this pair short. it might probably happen today or tomorrow. anyways i will update the entry criteria here.
Note
PRICE HAS ACCELERATED AWAY FROM OUR ENTRY TARGET. THERE IS STILL A CHANCE IT MIGHT RETRACE SOON. THE ECONOMIC CALENDAR IS FULL OF SPEECHES TODAY AND SOMETHING IS BOUND TO HAPPEN. STAY TUNEDTrade active
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