USDCAD eyeing a breakout as US crude crashes through Aug uptrend
Updated
Trade Idea - USDCAD is finding buyers easy to come by after the FOMC minutes, married with a poor tape in US crude. Technically, the pair looks set for a test and potential breakout of the June downtrend, but as things stand, both the technical set-up and fundamental story are lining up for a long entry.
Parameters: Long at current market price 1.3023, SL - 1.2914, TP - 1.3150
Why we like this trade – The broader technical outlook for oil is no longer bullish following the break of channel support and the move through the 50% fibo of the last significant range, with the RSI highlighting a similar dynamic. The next support key level comes in around $64.80 to $64.46, which is in-line with August low. Given that ‘loonie’ is highly correlated with oil and its impact on its terms of trade, a weakening oil price could have aid further downside for the CAD. So, while the USD is seemingly finding some love after the FOMC minutes, tactically, we feel marrying the USD with the CAD makes sense.
So, our base-case is that the USDCAD is set for a potential upside breakout, with the inverse head and shoulders neckline and triple top likely to be tested shortly. The strength behind yesterday’s bullish candle increases our confidence here and should we see a daily close through these resistance levels, then adding to longs would be worth looking at too. In this scenario, we would look to target $1.3126 and potentially 1.3183 level.
Disclaimer.
Trading leveraged products carries a high level of risk and may result in you losing substantially more than your initial investment. Pepperstone Group Limited is licensed and regulated by the Australian Securities and Investments Commission (AFSL 414530). Pepperstone Limited is authorised and regulated by the United Kingdom Financial Conduct Authority (FRN 684312). This information not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation
Parameters: Long at current market price 1.3023, SL - 1.2914, TP - 1.3150
Why we like this trade – The broader technical outlook for oil is no longer bullish following the break of channel support and the move through the 50% fibo of the last significant range, with the RSI highlighting a similar dynamic. The next support key level comes in around $64.80 to $64.46, which is in-line with August low. Given that ‘loonie’ is highly correlated with oil and its impact on its terms of trade, a weakening oil price could have aid further downside for the CAD. So, while the USD is seemingly finding some love after the FOMC minutes, tactically, we feel marrying the USD with the CAD makes sense.
So, our base-case is that the USDCAD is set for a potential upside breakout, with the inverse head and shoulders neckline and triple top likely to be tested shortly. The strength behind yesterday’s bullish candle increases our confidence here and should we see a daily close through these resistance levels, then adding to longs would be worth looking at too. In this scenario, we would look to target $1.3126 and potentially 1.3183 level.
Disclaimer.
Trading leveraged products carries a high level of risk and may result in you losing substantially more than your initial investment. Pepperstone Group Limited is licensed and regulated by the Australian Securities and Investments Commission (AFSL 414530). Pepperstone Limited is authorised and regulated by the United Kingdom Financial Conduct Authority (FRN 684312). This information not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation
Trade active
Trade closed: target reached
As per the original trade recommendation, our price target on USDCAD has been reached(TP - 1.3150) and therefore, the trade has been closed.
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