USD/CAD: How to trade the triangle breakout
The USDCAD pair broke below a well-defined triangle pattern on broad USD weakness this morning, trading below the key 1.3850 support.
What do you think of the pair? Let me know in the comments below.
Technicals:
A strong bearish candle is forming on the daily chart. The pair loves to revert to its mean, so we can expect a pullback to the 1.3850 resistance in the short-term. The triangle projects a profit target of cca. 400 pips to the downside. Next support at the 61.8% Fib that aligns with the 200-day MA.
Economic Surprises:
Neutral for both currencies. Score of 5 out of 10.
Flows: The USD index remains bullish positioned, while CAD remains bearish. Non-commercials cut their CAD longs by 3000 contracts. Asset managers and levereged money also increased bearish bets.
Risk tone: Despite the positioning data, markets are mostly driven by risk sentiment these days, similar to the aftermath of the 2008 financial crisis. CAD is following US stocks currently, with the bull run in stocks supporting the CAD and other high beta currencies.
Upcoming events:
May 26: BoC Poloz Speech - Due to testify, along with Senior Deputy Governor Carolyn Wilkins, before the before Senate Committee on National Finance, via satellite;
May 28: US GDP q/q
May 29: CAD GDP m/m
Correlations: Neutral at the moment. Spot USDCAD is nicely following oil and the S&P 500.
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What do you think of the pair? Let me know in the comments below.
Technicals:
A strong bearish candle is forming on the daily chart. The pair loves to revert to its mean, so we can expect a pullback to the 1.3850 resistance in the short-term. The triangle projects a profit target of cca. 400 pips to the downside. Next support at the 61.8% Fib that aligns with the 200-day MA.
Economic Surprises:
Neutral for both currencies. Score of 5 out of 10.
Flows: The USD index remains bullish positioned, while CAD remains bearish. Non-commercials cut their CAD longs by 3000 contracts. Asset managers and levereged money also increased bearish bets.
Risk tone: Despite the positioning data, markets are mostly driven by risk sentiment these days, similar to the aftermath of the 2008 financial crisis. CAD is following US stocks currently, with the bull run in stocks supporting the CAD and other high beta currencies.
Upcoming events:
May 26: BoC Poloz Speech - Due to testify, along with Senior Deputy Governor Carolyn Wilkins, before the before Senate Committee on National Finance, via satellite;
May 28: US GDP q/q
May 29: CAD GDP m/m
Correlations: Neutral at the moment. Spot USDCAD is nicely following oil and the S&P 500.
Please hit the "LIKE" button if you enjoyed our analysis. Thanks!
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