USDCAD: Rise To Fall
Updated
USDCAD is currently in an ascending channel, mostly due to falling oil prices and positive US jobs data. I believe we might see further gains tomorrow, but the exchange rate should fall in the medium term. Here are the main reasons:
1) At the moment, CL1! is at the lower limit of a multi-week descending channel. Indicators show it is oversold, so it will likely rise in the following days, pushing USDCAD down.
2) USDCAD is close to a multi-day resistance, and its relative volatility index (RVI) is close to 80, indicating a possible retracement.
My strategy for this trade will be the following:
1) At the moment, CL1! is at the lower limit of a multi-week descending channel. Indicators show it is oversold, so it will likely rise in the following days, pushing USDCAD down.
2) USDCAD is close to a multi-day resistance, and its relative volatility index (RVI) is close to 80, indicating a possible retracement.
My strategy for this trade will be the following:
- If USDCAD shows bullishness, wait until resistance is reached. If it cannot break it, short (at about 1.3080), with a stop loss just above the resistance (at about 1.3100, for a loss of 20 pips), with target at 1.2980 (profit of 100 pips).
- Short if USDCAD shows strong bearishness, with same target and stop loss just above breakeven (~13045).
Note
USD/CAD broke the first resistance, but was stopped at the ascending channel resistance, and fell to the 1.2990 handle, very close to my target (~1.2980). It now appears USD/CAD is rising again, but we may need more time to asses whether it will retrace or not. If it brakes the resistance at 1.3090 I might buy. Otherwise, I will short it again.
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