The USD/CAD is ripping higher with the release of the Canadian CPI. The numbers came as no real surprise to analysts, but currency traders and investors are getting long. Bullish market sentiment has driven price above key resistance levels and created a 50 pip run for the session.

Fortunately, the move north may bring a key macro resistance level into play in the near future. It proved valid in late October and early November, so another shorting opportunity is a welcomed sight.

USD/CAD Technicals

As a general trading rule, I am a big fan of obvious technical levels. They tend to bolster participation and provide many trading options. There is one on the horizon for the daily timeframe.

USD/CAD, Daily Chart

Price has clearly broken above robust topside resistance at the Daily SMA. While there are Fibonacci retracements that apply to the current wave, waiting for the macro level is likely to produce a greater return.

Bottom Line: The 50% retracement of 2017’s range (1.2926) has proved valid on three separate occasions, ultimately producing a reversal. The beauty of macro Fibonacci retracements is that they do not move, so this level will remain static until the yearly high or low is extended.

A short from the previous test area of 1.2905 to 1.2916 is a premium entry to the downside. An initial stop above 1.2955 will give this trade a great shot at positive price action.

While a 1:1 R/R is nothing to pass up, this trade may be worth more. As entry nears, be sure to check back for management parameters and ways to capitalize on the action.