USD/CAD Outlook: Finally A Break Above Topside Resistance?
Shain Vernier • 2 min read
Last week was a fantastic week to trade the USD/CAD. We had several great recommendations and trading signals, topped off by a solid Friday signal and position trade recommendation. All in all, it was a productive five session stretch.
Now, let’s see if we can find a few setups that may produce some more positive pip trades!
The Group Of 30
Sunday morning’s Group of 30 meeting in Washington D.C. gave many traders with a bullish view towards the USD good news. Federal Reserve Chair Janet Yellen was at it again, stating that “soft inflation will not persist,” and that a gradual raising of interest rates is the likely scenario as we move into 2018.
This not a real big surprise to anyone that has followed the FED and FOMC over the past year or so. There is a real desire to tighten monetary policy, but the inflation metrics simply do not support the viewpoint. We are just going to have to stay tuned and see what happens.
USD/CAD Technical Outlook
It only takes a glance at the USD/CAD daily chart to appreciate the gravity of Yellen’s statements.
USD/CAD, Daily Chart
A few of the key areas to be aware of:
Topside resistance at the 78% retracement of 1.2530 is crucial to trade moving forward.
The round number of 1.2600 will bolster participation.
The daily Bollinger Band and EMA levels at 1.2450 and 1.2446 give formidable downside support.
Bottom Line: This market has the potential to run considerably higher. Fundamental news items have produced the current rally. However, once the 1.2530 level is put in the rear-view mirror, we are likely to see a test of 1.2600 and an extension of October’s range.
For now, this is a wait and see scenario. I could justify going long from 1.2530 right now, but waiting until tomorrow’s session will contribute to the odds of success.
In the meantime, be sure to check out the market signals page for trading ideas facing a wide variety of asset classes.