FxWirePro: Short-term buy opportunity in Canadian dollar against USD with 2:5 risk reward ratio

The current price actions suggest that the Canadian dollar might actually strengthen against the USD going ahead, despite the fallouts from the current trade arrangements with the United States. The United States has announced that it has reached an agreement with Mexico and will move ahead with forging one even if Canada fails to join in. The negotiations are currently taking place in Washington on the future of U.S. - Canada trade relations.

Since the beginning of September, the Canadian dollar weakened from 1.29 per USD to 1.316 per USD as of today. It may quickly reverse course if an agreement gets reached. While it is possible that the Canadian dollar weakens further, our calculations suggest there is also a strong possibility that it might strengthen to as high as 1.25 against the USD.

Technically speaking, it makes sense. The chart above clearly shows that if the Canadian dollar declines to 1.25 area, it would be testing the resistance of a long-term bear trend (CAD).

Trade idea:

For short-term, sell USD/CAD at the current price of 1.316 with a target of 1.25 and the stop loss around 1.34 area.