USD/CAD Trends Higher-More Trades On The Horizon

The USD/CAD is ripping higher in the wake of the Bank of Canada’s (BOC) announcements. High volatility has defined the session for the Canadian dollar as it shown considerable weakness against the greenback, posting a three-month low.

A dovish stance from the BOC is the culprit for the fading CAD. Interest rates were held at a static 1%, promoting the availability of capital for companies and consumers alike. After rate hikes in July and September, the BOC decided to stand pat at least until December.

Technical Outlook USD/CAD

Today’s technical outlook in the post-announcement market is straightforward: trend day up.

USD/CAD, Daily Chart

Currently, the USD/CAD is trading in the neighborhood of 1.2800. Price shattered previous resistance at 1.2722 and has made an intraday high of 1.2816. As we move into the latter half of the week here are the key levels:

• Macro resistance is present at the 50% retracement of the yearly range (1.2926).

• The 38% retracement of the yearly range (1.2722) now acts as support.

Bottom Line: For the time being, I am on the sidelines for the USD/CAD. Starting with tomorrow’s session, shorts from the 50% retracement level will be open for consideration. Check back for strategies on how to trade this level successfully.

In an earlier update, I outlined the various trade management strategies for preserving profit and limiting risk ahead of the BOC’s statements. Today’s action in the USD/CAD is a prime example of how news items are capable of swinging a market dramatically upon their release.

It is crucial to always be aware of the economic calendar and aggressively manage risk to ensure future reward. If at all possible, we must avoid giving profits back to the market!

ABOUT THE AUTHOR See More

Shain Vernier

US Analyst

Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.

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