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Forex Trade Signal – Chart of the Day Sept. 2nd
USDCAD – Potential Kumo Break and More
After double topping and taking a few stabs at the 1.0675 level, the USDCAD has fallen for a second time and is testing a critical level now which is the 1.0450-80 range. Why is this so important? Two main reasons with 3 trading opportunities.
1) It is basically where the 20ema on the daily chart is sitting. This has propped up the pair a few times before and could very well hold it up again for another run at the highs. Could be a great opportunity for low risk longs. It has also been a resistance level several times in the past so its got some grumba in terms of the market paying attention to this level. See chart below.
For Bears: One of the other opportunities that presents itself in this chart is the possible sell opportunity at 1.0675 which has held off several attempts in the past so both shorts and longs have potential plays here.
2) The 1.0457 level also houses two key marking points; a) the 38.2% fib level of the 1.0100 – 1.0675 run. This could also act as a support if the pair is really considering a run higher. But what is also interesting is how this level lines up perfectly with a flat bottom Kumo. These can either reject price to move back up to the top of the Kumo or become a critical line in the sand should it get broken and closed below. Flat bottom Kumo breaks can often lead to powerful reversals so this level has to be watched closely for a close below could easily send this pair to the 50% fib but possibly down to 1.0250 or even 1.0100 where the move started. See the chart below as this chart really offers something for both bulls and bears. But the lines in the sand are clear.
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