USE HOURLY OVERSOLD READING AS ENTRY POINT FOR COUNTER-TREND LONG; BUY @1.1230
Usd/Cad: We continue to look for opportunities to buy the highly overextended pair and will once again take a shot on Friday if the market decides to test our entry level. The daily RSI is flirting with the oversold 30 level and although there is room for additional setbacks, the risk for a corrective bounce is increasing. Markets have a tendency to overshoot and particularly on lightened pre-holiday trade. As such, we will look to buy on a dip when the hourly studies are also showing overextended to allow for the greatest chance for success. This will likely come in somewhere on approach to 1.1200. Strategy: BUY @1.1230 FOR A 1.1800 OBJECTIVE, STOP @1.0980. Stops to be trailed to cost on a break back above 1.1330. If trade triggers and 1.1330 not broken, position to be closed out at NY close (4pm NY time) on Friday. Recommendation to be removed if not triggered by NY close on Friday.
Written by Joel Kruger, Technical Currency Strategist for DailyFX.com
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