The commodity currencies have been on the move in the post-Christmas period and the USD/CAD was one of the major movers yesterday.
A Libyan pipeline attack sent the price of crude oil jumping yesterday and that had a positive impact on the CAD. Now if we look at the USD/CAD chart we can see that we are getting ready to try and breakout to the downside.
Price has been in this range for a number of months now and the lows at 1.2673-ish have held up on a number of occasions. Now we are once again having a real crack at these levels.
This pair has been getting the benefit of two-way price action as the USD has been on the decline, while the CAD has seen some strength.
The good news here for long-term traders is that we have a good risk/reward on a potential move. Should we be able to hold this level, then we have the potential to move even lower.
The next major support level is at the swing low at 124.50 and that means we have a fair few pips to work with. A small retrace back into the range is all we might need for a decent level of risk.