Key Resistance Level Alert For The USD/CAD
Shain Vernier • 1 min read
Today’s session has been a good one for the USD across the majors. Gains against the Swiss franc, Euro, Aussie and British pound have been a welcomed sight for greenback bulls. The positive price action has spilled over into one of my favorite forex targets, the USD/CAD.
There is heavy topside resistance on the horizon for the northbound USD/CAD and a potential premium trade location to the short.
USD/CAD Technical Outlook
The USD/CAD has finally broken out of our defined compression zone. Beginning last Thursday, green candlesticks have been the norm.
USD/CAD, Daily Chart
Heavy resistance is present at the 38% Fibonacci retracement of the yearly range, 1.2722.
The upcoming WTI crude oil inventory cycle will bolster participation potentially bringing this level into play.
Bottom Line: Currently, we are trading in the 1.2660-1.2670 range. The round number of 1.2700 was traded heavily in August and will be a point of contention as the week wears on. With a bit of luck, this week’s WTI crude oil inventory cycle will work in our favor.
Taking shorts from the 38% retracement of 1.2722 is a solid way to trade this market. It is premium trade location from a long-term resistance level.
The Trade: I will be shorting from 1.2712-1.2722, looking for rotation back towards 1.2650-1.2600. An initial stop above 1.2775 will give this trade plenty of room to work and many trade management options as the position develops.
The initial stop loss for this trade is large. In the event it goes live, check back for ideas on actively limiting downside risk while maximizing profitability.