Trade Recommendation: CAD/INR
The Canadian Dollar/Indian Rupee pair (CAD/INR) started its uptrend in July 2009 when it breached resistance of 42.50. The price action triggered the large double bottom reversal pattern on the weekly chart. In addition, the breakout attracted momentum traders and trend followers who helped lift the market to as high as 65.957 in August 2013. In four years, the Canadian Dollar grew by over 55% against the Indian Rupee.
At this price level, the market was in extreme overbought territory. Those who followed the trend used it as a signal to ignite heavy selling activity. The pressure drove the pair down to 58.313 in October 2013. Bottom pickers bought the dip but they could only inspire a rally to 60.962 in November 2013.
With a lower high in place, market participants dumped positions to preserve their capital. As a result, the pair plummeted to as low as 46.342 in January 2016. At this point, however, the market was flashing reversal signals. A bullish divergence can be spotted on the weekly chart. Furthermore, the pair showed oversold readings.
The market responded by launching a strong rally. This could be your chance to buy the next breakout.
Technical analysis reveals that the Canadian Dollar/Indian Rupee pair has completed a five wave down. It is currently in the process of reversing its trend after printing a higher low of 46.571 in May 2017. In addition, it is threatening to take out resistance of 53. Breakout at this level would trigger the double bottom reversal pattern on the weekly chart.
The strategy is to buy the breakout at 53. Once the market is above this level, bulls may create a new base before crawling to our target of 59.
The process may take six months.
Weekly Chart of CAD/INR
As of this writing, the Canadian Dollar/Indian Rupee pair is trading at 52.633.
Summary of Strategy
Buy: Buy on breakout at 53.
Stop: 51 after the breakout.
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