When you look at my previous idea for this pair in which I predicted the drop to the 1.34 area, you can see that 75% of the drop has already been reached and in my opinion there is not much that can keep it from dropping further to the predicted level.
Around 1.34 we have a previous resistance level which should now (at least temporarily) become support and we should see a bounce. The stop loss is defined by the bottom of the price action defining that resistance level.
I have defined 2 target areas for the upward move : TP1 is the current price level where there is a (small) shelf, if we bounce this should be easily reached. This target presents us with a 1:1 risk reward ratio and a potential profit of around 110 pips. TP2 is a previous support level on this time frame around the 1.3650 area, this is almost a 2.3:1 RR ratio a potential pip profit of around 250.
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Targets of the previous trade down were reached, time to look for a good entry and confirmation to go back up.
Very convincing. I'm trusting that it is reliant on that oil continues to hold at current level to meet the support level or goes into/through reversal zone if oil rises. Nice observation. Thanks.
Nico.Muselle
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Of course CAD is very correlated to oil, so yes, this will have to cooperate a little to have this prediction work out. I do not see OIL rising above 35$ anytime soon (as we have a previous support level there and there is just no reason to assume demand would highly increase).