Day trade
Trade view / 26 October 2015 at 8:55 GMT

Dips to be bought as USD Index hits channel top

Analyst / PIA First
United Kingdom
Instrument: USDCAD
Price target:
Market price:
Background

USD Index – Strong upward momentum has resulted in the USD index reaching the top of the daily corrective channel formation. This week’s outlook is to buy on dips with ample scope, if not a mild bias, for some selling pressure today in the dollar.

Prime support levels are:

1.    96.49. This is a reverse trend line support and or bespoke level
2.    95.95. This is weekly support and close to the Marabuzo level of 95.98

A daily close above last week’s highs and the next target is the channel top at 100.78. We have no exhaustion/correction counts or bearish reversal pattern so look for dips to be bought.

USD Index Channel Top
USD Index


Source: Saxo Bank. Create your own charts with SaxoTrader click here to learn more

USDCAD – I have taken a small USDCAD long this morning and will look to build if the correction lower continues. This is based on the following analysis:

1.    Weekly chart highlights an Ending Wedge formation but with ample scope for a good move to the upside.
2.    Daily chart is inside the Ichimoku Cloud. Stalled at the cloud top on Friday but, with a bullish Outside Day noted, dips should be bought.
3.    Four-hour chart highlights a revers Head and Shoulders breakout with a measured move at 1.3269. The stalling overnight can be seen as a pause at the 161.8% extension level of 1.3181 (from 1.2832-1.3047).

The only negative outlook for this view is the expanding wedge pattern that is possible on the 2-hour chart. However, there is ample scope for a move to the upside with the trend of higher highs not seen until 1.3344.

USDCAD - Head and Shoulders Target
USDCAD 4
 Source. Saxo Bank

USDCAD - Ending Wedge
USDCAD D
Source: Saxo Bank
 
USDCAD - Monthly Outlook
USDCAD Monthly
 Source: Saxo Bank

Management and risk description
A move to 1.3215 and we look to move stop to entry (61.8% pullback of the 1.3457-1.2832 move).

Parameters

Entry: Long at 1.3170 (1 unit). Buy at dip at 1.3127 (1 unit).

Stop: 1.3100

Target: 1.3265 (1 unit) and 1.3390 (1 unit)

Time horizon: this week

— Edited by Clare MacCarthy

Non-independent investment research disclaimer applies. Read more
4y
Ven78 Ven78
Hi Ian, by when do you expect the dollar breaking through the channel top?
4y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
Really hard to tell. It could break today. We would then look for a retest of the breakout level to trigger longer term USD buying. Even if we do get mild USD selling, it shouldn't effect the EURO too much as it is negative in all crosses.
4y
mfvgml mfvgml
do you have twitter ?
4y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
yes. First4trading@firstfortrading
4y
Ven78 Ven78
Thanks Ian :)
4y
mfvgml mfvgml
Thanks
4y
assi assi
Hi Ian, is there is any update for this trade....??
4y
Ian Coleman - First 4 Trading Ian Coleman - First 4 Trading
morning assi. Signals are not as strong as yesterday. I would look to pull stop to entry or even take partial profit. DeMark highlights an exhaustion count on the 4 hour chart

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