Yesterday evening we opened a forex signal on the USD/CAD. It was retracing down after a strong uptrend and we decided to buy this pair at the 50-SMA, since the chart setup looked like it was going to turn bullish pretty soon.
But, as the title of this forex update implies, the H1 chart gave up and the 50-SMA was broken. But, I can see another interesting chart setup on the H4 time-frame. I mentioned this chart time-frame in the last forex update last evening and now it has come into play.
As you can see above, a bullish chart setup is forming here. The stochastic indicator is almost oversold which means that the pullback lower is almost done. The trend is obviously bullish, so we are in the right direction.
The 50-SMA got broken on the H1 chart, but the 20-SMA has taken its place as a support indicator now, which has stopped the decline on this forex pair.
The previous candlestick on this chart looks like a doji, albeit small. The doji is a reversal signal, particularly after a retracement. So, it is suggesting that this pair will reverse higher soon, which is actually taking place right now. The current candlestick looks pretty bullish, so the reversal is underway. We’re holding on to our signal, hopefully it will reach the take profit target and we will get our pips.