We were finally able to get involved on Monday with our desired entry price being hit, but unfortunately the result was not what we were looking for after being forced to exit the trade for a 60 point loss on the New York close. However, this does not change the fact that we still believe a major upside reversal is in the cards and the question now is only an issue of timing.
LOOKING TO GET BACK IN ON DIP TOWARDS 1.1600
Techs – Usd/Cad: We were finally able to get involved on Monday with our desired entry price being hit, but unfortunately the result was not what we were looking for after being forced to exit the trade for a 60 point loss on the New York close. However, this does not change the fact that we still believe a major upside reversal is in the cards and the question now is only an issue of timing. The optimal entry point for a long trade is very near with the daily RSI on the verge of rolling into oversold territory (just over 30 at present). As such we will look to once again buy on a dip today, with our revised entry point sure to coincide with a daily RSI well below 30 and an hourly chart that is also oversold, making the risk for a reversal extremely high at that point. If our entry is triggered today, we will not exit the trade on the New York close and will hold onto the position until stop, profit or further instruction. In reference to the broader structure, the pair has pulled back quite sharply over the past several days with the market breaking to fresh multi-day lows below the 200-Day SMA to the lower 1.1700’s thus far. While the current pullback changes the picture somewhat, the broader structure still remains constructive with the market locked in a longer-term bullish consolidation dating back to October of 2008. As such, any dips towards the bottom of the range should be used as opportunities to establish long positions in anticipation of a move back into the mid-range at a minimum. Strategy: BUY @1.1605 FOR A 1.2270 OBJECTIVE, STOP @1.1380. Stops to be trailed to cost on a break back above 1.1700. Recommendation to be removed if not triggered by NY close (5pm ET) on Tuesday.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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