Yesterday we opened a buy forex signal in USD/CAD. This pair had been climbing higher for more than a week and broke all moving averages on the way up in the H4 chart. Although, yesterday it was retracing lower and the retrace was complete when the stochastic indicator became oversold.
We decided to go long, hoping that the next leg of the uptrend would resume soon. But, the uptrend didn’t resume after the retrace lower.
The US Dollar went downhill last night and continued further today. The Buck has lost nearly 100 pips across the board since last night. Nevertheless, the support in USD/CAD has remained in place and it has prevented this pair from falling.
This, in itself, was a good sign for buyers. If a pair can’t go down, it will surely go up. So, if the CAD couldn’t take advantage of the USD when the USD lost 100 pips, then it will likely reverse when the USD buyers return.
We are heading higher now, after ranging for several days
The 200 SMA (purple) did a good job in providing support. It has provided support throughout the week and now the buyers have returned. USD/CAD is playing with the 1.25 level now, putting our signal about 20 pips in profit. All of that thanks to the 200 SMA which didn’t let the sellers push this pair past it.