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USD/CAD Trigger
- Daily and 4H: There wasn’t a correction the way we anticipated yesterday. (Refer to Daily Technical Update 11.09.2009 USD/CAD). Instead the pair had a flat correction, and is now breaking below this consolidation area, providing a trigger for a decline.
- The parity scenario is just that, a scenario, so the 1.000 is not a target by technical calculations, but more based on psychological reasons.
- The former support at 1.0220 is a more viable target.
- We do have a scenario where there is support at 1.0500. At the moment, price action is suggesting otherwise, so we may have a sharper decline than originally anticipated.
USD/CAD Risk Analysis with Trigger
- 1H: As I am writing this, the pair is declining to the 1.0500 area, which I projected to be around the close of the 10:00AM EST candle, which is our trigger in the 1H time-frame.
- With 2 ATRs above recent powerline, we would have a stop-loss level 170 pips away around 1.0670.
- A short-term swing projection targets 1.0360, yield a below 1:1 reward to risk ratio. We don’t use this as our projection, because we have already established our bearish outlook, and the market is confirming with the hold of resistance in the daily chart, so the 1.0220 projection is viable.
- Still we can expect some support at the 1.0360 area.
- The target of 1.0220 yields a reward to risk ratio 1.65:1. This is not great, but we know a potential more aggressive target is at 1.000, which yields almost a 3:1 ratio.
Fan Yang
Currency Analyst,
Commodity Trading Advisor
