Forex Weekend Preview: Key Resistance For The USD/CAD
Shain Vernier • 2 min read
It has certainly been an active week on the forex, full of economic events and news items. U.S. equities have resumed their strength and the USD has gone on a wild ride. For the first time in recent memory, the FED raised rates and the markets reacted as if the tone was dovish. As we near 2017’s finish line, I expect more fireworks and considerable action.
Pending ratification of President Trump’s tax reform plan is going to be the dominant headline over the next week’s news cycle. The upset win by the Democratic party in the Alabama Senate race has increased Republican urgency to get something done before the Christmas recess.
Only time will tell. Government has a history of moving very slowly and I am skeptical that anything will be accomplished over the next seven days. If tax reform is not passed in the next week, then its future will be in jeopardy. If this scenario unfolds, a serious correction could be in the offing for U.S. equities.
Weekend Economic Calendar
This weekend brings us another wide open economic calendar. Most of the heavy hitters in the financial world are headed out on holiday, so not much is scheduled. Later this afternoon, keep an eye on the U.S. CFTC gold net positions report. This is an item that I have not paid much attention to over the years, but last week there was a considerable move in gold upon its release.
If you are active in the cryptocurrency markets, be aware of the CME Bitcoin futures launch Sunday afternoon. Institutional players will be involved with the large contract, so look for volatility in the cash and CFD markets. Get your stops down and leverage in check ahead of time to avoid possible disaster.
USD/CAD Technical Outlook
In an earlier update, I outlined a short location in the USD/CAD from macro resistance. The USD/CAD has made a run at this level during today’s U.S. session, potentially bringing a short setup into play.
The most important level on the daily chart is the 50% yearly retracement at 1.2926. The double top area of 1.2916-1.2909 has proven valid on several occasions. Today’s bull run may bring this level into play once again.
Bottom Line: For the near future, I will be shorting the double top area from 1.2904. An initial stop above 1.2951 will offer many trade management options depending upon the profit target desired. This setup is a position trade and one that I will carry into the weekend if it goes live this afternoon.
A 1:1 R/R scenario produces over 40 pips profit, but a larger payoff may be possible. This trade may take an extended period to develop. If it goes live, check back for tips on how to best manage the open position.
Remember, next week is always the best week. Hopefully, this week has filled your account with green pips. If not, opportunity is just around the bend.