ForexPros Daily Analysis June 07, 2011
Did the USD/CAD shake you out?
The Canadian has made a long bearish hammer after it broke through 0.9815 on Friday. Many amateurs closed their position during that shake-out, and now the CAD might rise up without them.
The most important thing before opening a position is to set clear stop levels before going in. By doing that, the trader avoids getting nervous by the shake-out. In this case, if you entered during the break-up, you should have set the stop under Friday’s & Thursday’s lows at 0.9740. Traders, who did that, shouldn’t let the volatility to shake them out of the trade, since the price did not reach the stop.
Yesterday’s candlestick was green, and my assumption for rising will turned to reality if the Canadian breaks through 0.985, which is the hammer’s high.
The 20 EMA crossed the 50 EMA in the daily and it is a strong sign for possible rising. Nevertheless, the main trend is still bearish and the Canadian is no doubt stronger than the USD if you analyze the big picture.
Stochastic levels are getting close to overbought, but as long as the support at 0.965 is stable, there are good chances for a significant bullish move.
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Forex Trading analysis written by Bastian Rubben for Forexpros.
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