Trading Rotation-Key Levels For The USD/CAD

Posted Wednesday, October 18, 2017 by
Shain Vernier • 2 min read

The USD/CAD has settled back into a rotational pattern. It seems to be the norm for this commodity pair, and we can certainly line up a few trades to capitalize upon the market state.

This week’s crude oil inventory cycle has certainly impacted the Canadian dollar’s value. Lagging stocks in the API report yesterday, and a -5.731 million barrel draw in today’s EIA number have ensured that oil prices stay above $50.00 for the near future.

Crude oil pricing often drives the value of the CAD, and this week’s stocks have given a bit of shelter to its recent fade against the buck.


USD/CAD Technical Outlook

In yesterday’s late U.S. forex session brief I outlined a trading opportunity for the USD/CAD. The API numbers came in extremely negative and swept out the support level of 1.2530 while only providing a nine pip positive move.



Perhaps trading the USD/CAD on a Tuesday afternoon is not the best idea in the world with crude oil inventories coming in. But, those statistics bolster participation and volatility. As long as the risk management is in place, the potential gains outweigh the losses.

We have several downside support levels coming into play on the trending USD/CAD:

  • Support level 1: Bollinger Band MP 1.2463

  • Support level 2: 20 Day EMA 1.2459

  • Support level 3: Daily SMA 1.2428

  • Support level 4: 38% Retracement 1.2392

Trading Plan: As of now, the USD/CAD is trending bearish on the intraday timeframe due to the crude inventories. Scalping longs from each support level with a 1:1 R/R scenario is a way to trade this market in a counter-trend fashion.

The optimal long for today is from the Daily SMA at 1.2435-1.2428. This level can be a turning point, and a 1:1 R/R with an initial stop below 1.2392 is a high probability setup for over 35 pips.

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