USDCAD will go down and afther correction strong bullish trend will continue.Price is 1,015 right now.
There are two kinds of traders in the currency market, trend traders and long term traders. Trend traders follow the trend of the market. The trading in the currency pair of the USA dollar v/s Canadian dollar has been very difficult, for trend trades, during the first six months of 2012.
What was the reason?
The reason was because the currency pair USDCAD was on downturn continued. This currency pair made its high at level of 1.0657 , on 4th October, 2011. After making its high the down trend had been observed in this currency pair. Its price has declined 856 pips of its high price level 1.0657 in October, 2011, and 30th April, 2012 it made low as .9801 levels.
New Probability Emerged
As the huge decline has been observed in this currency pair, so the probability of a fresh trend in it has emerged, along with USDCAD’s formation, first higher high along with a break peak level of the the parity in value , 1.0000.
What is Parity?
Before I move forward, let me explain the parity:
Parity is a price equal 1.0000, in case of currency pair CADUSD, or in other words, when the Canadian dollar is equal one US dollar.
So, break above the parity’s level, ‘psychological whole number’ (the trader often calls this whole number ‘double-zero, because the price is at even number like, 1.31000) has tempted many traders, so they considered the daily downtrend that was observed in the past. Price of the pair started moving and become high, it has to touch the highest level, of 2011, yet. So in which direction, the traders will place their orders?
Here, I am going to explain spot market momentum, by using a four hour chart, in this chart you can find important technical clues, and can use them in spot market momentum. In this chart you can observe the development of the possible bullish ensign patterns. This pattern could be consisted of connecting your post breakouts rise in the price to the parallel declining price pattern.
At this time this declining channel has formed by connecting third, fifth, and eighteenth June, highs. The support has been created by generating a parallel line by connecting the wick formed on 7th and 10th June lows. The ensign pattern has been seen as a carryover pattern and would come to finishing point just upon breakouts to higher highs.
When these breakouts will happen, then this pattern could be utilized as a projection of the price. You may measure the breakouts from the resistance to your current highs. This distance could be utilized from the breakout’s point for the formation of potential profit target.
BY using current price on the currency pair USD v/s CAD, you may place a projection above 1.0540. I recommend buying on USDCAD pair on the breakouts of the ensign pattern at 1.0240, above last high, limit between 1.0540 to 1.0600, and stop at 1.0090 and Risk-Reward Ratio 1:2 .
Alternative scenarios incorporate price breaking under support, confirming the bullish ensign formation.