dtu_052510_usdcad15

  • 15-min: This is an immediate followup of today's post, Stalking USD/CAD as it Tests 1.10. This of course has not happened, as the pair is at the 1.0820 area. In the 15-min chart we can stalk this rally close and find confirmation of continuation, or clues of reversal.
  • At the moment, price action shows a struggle to rally above 1.0850. The momentum has stalled.
  • However, in this correction is an opportunity to check the shift in momentum. Looking at the RSI, a positive reversal coming out of a w pattern above the 50 level is a good sign that bulls are still in charge.
  • The RSI is above its SMA5 at the moment, after it crossed back up following the w pattern. This is an indication that the market is NOT ready for a reversal.
  • Below are Risk assessments for 2 scenarios.
  • Scenario 1: 2nd leg of correction goes to 1.0780 area. Theoretical entry trigger @ 1.0820 after failure to break below 1.0780. Using 2 ATR from powerline, the R/R for scenario 1: 1.1050-1.0820 / 1.0820-1.0735 = 230/85 = 2.7
  • Scenario 2: No 2nd correction leg. Market breaks above 1.0850 high and offers throwback. Theoretical entry trigger at 1.0880. Using 2 ATR from powerline, the R/R for scenario 2: 1.1050-1.0880 / 1.0880-1.0810 = 170/70 = 2.48

Fan Yang  Currency Analyst Commodity Trading Advisor