The USDCAD currency pair remains in the range first discussed with the March 7th, Chart of the Day . Resistance can be seen holding at 1.0025 on the daily chart below, with a recently created wick on March 23rd. This level has been tested for the seventh time, with price refusing to break higher. Current support is still held by the March 3rd low at .9841. If price stays above this point and continues to range, traders may look to a variety of strategies to enter in fresh buy order.
Typically, range traders will look to buy support and sell resistance levels for as long as these levels hold. There are many ways to plan for entry, but the easiest is simply placing a price order to buy at support or sell resistance. Entry orders allow us to set an order away from present market that will execute when the price we select becomes actively traded in the market. This is extremely beneficial to traders because we don’t have to sit in front of a chart for these price levels to be hit!
Stop and limit orders are easy to identify in a range bound market. Stop losses when range trading should either be placed below support, or above resistance. This will allow us to exit a position in the event of a breakout. If price breaks out to lower lows or higher high, our range has been nullified and it is in our best interest to look for new positions. Limits can look for a full or partial extension of the range to either support or resistance levels depending on your buy/sell preference.
My preference is to set entries to buy the USD/CAD at .9850. Stops should be placed below support at .9800. Limits should first target .9950 for a clear 1:2 Risk/Reward ratio. Secondary targets can be placed above resistance at 1.0025 in the event of a breakout.
Alternative scenerios call for a breakout of support and resistance.
---Written by Walker England, Trading Instructor
To contact Walker, firstname.lastname@example.org. Follow me on Twitter at @WEnglandFX.
To be added to Walker’s e-mail distribution list, send an email with the subject line “Distribution List” to email@example.com.