Forex Weekend Preview: Short Entries For The USD/CAD
Shain Vernier • 2 min read
Another trading week is coming to end. It has been quiet by forex standards, with very little to report on the news front. Limited economic data often produces tighter than usual trading ranges, and that is exactly what we have seen develop over the past four-and-a-half sessions.
Time To Take A Break And Recharge The Battery!
Successfully trading slow markets requires patience and discipline. Some of the most difficult aspects of short-term trading involve keeping the proper perspective in the inactive marketplace.
This weekend is another quiet one on the news front. Saturday marks the observance of Veterans and Armistice Day, but other than that the economic calendar is bare. Sunday and Monday’s session will bring a few items worthy of note:
China: Foreign Direct Investment (YTD, Oct.), Industrial Production (Oct.), Retail Sales (Oct.)
U.S.: October’s Budget Statement
I expect a true representation of price action on Monday’s open, but anything can happen over the weekend. Any breaking news items have the potential to shake up markets at the drop of a hat.
It seems as though the USD/CAD is settling into heavy rotation after concerted selling mid-week.
USD/CAD, Daily Chart
The USD/CAD has posted a tight daily range of only 30 pips. While the recent run-up in WTI crude oil has boosted the Canadian dollar, intraday selling of oil has the USD/CAD in a holding pattern.
Here are a few levels I will be watching for Monday’s open:
Resistance(1): 38% retracement of yearly range, 1.2722
Resistance(2): 38% retracement of October’s range, 1.2731
Currently, the USD/CAD is trading 1.2687, in close proximity to the 20 Day EMA and Bollinger MP. Upon today’s close, we will have a converging support area including the 20 Day EMA, Bollinger MP, and Daily SMA. This will be key area moving into next week’s trade.
Trade Idea: As of now, price is noncommittal. With such a tight range, choosing a direction is difficult. However, a short from the topside resistance levels is a positive entry:
Short entry from the macro 38% retracement level at 1.2722 with an initial stop at 1.2756 sets up a 1:1 R/R for 24 pips.
This trade is unlikely to be elected today but will remain valid moving into Sunday’s open.
Premium long entries will be from the Sunday/Monday Daily SMA, so check back next week for a detailed trading plan facing the USD/CAD.
Until then, trade smart and for Monday morning. Remember, next week is always the best week!