USDCAD: Long Greenback/Loonie *** Update ***
January 23 *** Update ***
USDCAD hit and broke through our first resistance level at 1.3330 yesterday and currently is quoted around the same level. Originally we thought a break above here would see the pair push up to 1.3390, but now we change our view, The original idea was a short-term trade, under 1 week, and this idea is now two weeks old. We now look to exit this trade idea completely.
Original Story Below - January 9, 2019
Stop Loss – 1.3100
Target 1 (50%) – 1.3330
Target 2 (50%) – 1.3390
The Brand New DailyFX Q12019 USDand CAD Forecast s arenow available to download.
USDCAD Oversold and Looking for a Short-Term Bounce
We look to go long USDCAD for a quick trade with a time frame of one day to one week. The near five point drop this year has sent the pair into oversold territory -the RSI indicator at the bottom of the chart - and heading towards the 200-day moving average (1.3135) for the first time since late-October 2018. Just below here, 38.2% Fibonacci retracement at 1.3124 adds further support.
To the upside, the 23.6% Fibonacci retracement at 1.3330 is our first target (50%) before the bottom of the 20- and 50-day cloud at 1.3360 (50%).
From a fundamental stance, the Canadian dollar is reaping the benefit of expected monetary tightening in 2019, although the market is only pricing in around 11bps of rate hikes this year – roughly 50% chance of a 25bp hike – while over in the US rate a 25bp rate hike is expected but not until mid-year, or when/if data allows.
A high risk trade which should be approached as such – i.e.. small size and a tight, guaranteed stop.
USDCAD Daily Price Chart (January 2018 – January 9, 2018)
IG Client Sentiment Data shows how retail investors are positioned in a range of currencies and asset markets.
What is your view on USDCAD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at firstname.lastname@example.org or via Twitter @nickcawley1.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.