Good morning team,
A false breakout to the upside on gold, unfortunately, took our stop loss. Over the past couple of days, the market has moved in a fairly whipsaw action leading into the FED announcements. The USDCAD has created a number of bullish candlestick formations and we will be looking to trade in the favour of the USD.
The market is widely expecting the FED to keep interest rates on hold at 0,25%, however, traders will be looking to the FOMC economic projections. The FED has committed to keeping interest rates low for the next several years. The main event will be the quarterly update on GDP, unemployment and inflation. The FED is expected to maintain their cautious approach, however FOMC members are potentially looking at upgrading their previous negative economic forecasts. Therefore we see the possibility of USD strength coming out of the announcements. This will be a tricky event to trade as the timing is between 4 am-4:30 am tomorrow morning.
USDCAD – Daily Charts
The daily charts have created a number of bullish candlestick formations. The wicks to the downside indicate buyers are stepping into the market. The 1.3140 support zone is a key zone as mentioned in the member’s email on Sunday.
USDCAD 4 Hour Charts
The USDCAD is potentially setting up a head and shoulders formation. The shoulder line can be found at 1.3135 and the neckline 1.3250. We are looking to buy the pair in anticipation of a break above the neckline towards the next resistance zone at 1.3315.
Trade Setup: BUY market execution, current price 1.3187, stop loss 1.3107 and take profit 1,3315.
Stop loss: 80 pips
Take profit: 128 pips