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USD/CAD Forming Ideal Long Opportunity

Last updated 2/16/2009 7:15 PM EST (GMT -5) 0 Comments - Add your comment

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Bradley W. Gareiss

Technical Analyst, GFT

The USD/CAD is providing a truly outstanding potential trade setup to go long.  It is extremely rare to see a pattern with virtually perfect convergence of so many factors that may cause strong support.  If the trade completes as drawn, there are not many trades better than this.

We are looking to buy the USD/CAD at point D (1.2220).  Point D is located at the convergence of the following points:

To reiterate, the ratios described above are moving in almost perfect harmony.  There are frequently setups in which these ratios are in the same area, but rarely do they converge so tightly.  The only caveat with this setup is that the CD leg has a long was to drop before it completes.  We will watch to make sure we have decent time symmetry.  We do not want to enter this trade too late.

To recap, we will look to buy the USD/CAD at 1.2220 with our stop placed at 1.2160.  Our initial profit targets are 1.2306 (38.2% of CD) and 1.2376 (61.8% of CD).  A stop is mandatory for this trade, because a break through such strong support could cause this pair to plunge.

8hr Chart - Bullish trend line converges with our entry at 1.2220.	4hr Chart - Bullish Gartley; buy @ 1.2220.

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