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USDCAD: Long Greenback/Loonie *** Update ***

USDCAD: Long Greenback/Loonie *** Update ***

Nick Cawley, Senior Strategist

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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

Long USDCAD1.3190

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.

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

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 nicholas.cawley@ig.com or via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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