Buying the Pullback in USD/CAD at the 50 SMA
USD/CAD made a jump higher last Friday after some terrible economic numbers from Canada. Core durables orders and CPI inflation declined by 0.4% month-on-month and, as a result, USD/CAD jumped around 100 pips higher.
Although, the sentiment improved somewhat towards the end of the US session that day after a few promising comments regarding Brexit and the Italian budget for next year, so USD/CAD slipped lower.
This pair opened with a gap lower last night as sentiment improved a bit further over the weekend. But, the buyers were quick to seize the opportunity and jump in, sending USD/CAD back near the top. But, we’ve been seeing another retrace lower during the European session this morning, so now we are taking this opportunity to go long on USD/CAD.
The area where we went long, around 1.3080, has been the high in more than a month, so it has worked as resistance. Now, that the price is coming from the upside, it is supposed to turn into support.
Besides that, the 50 SMA (yellow) has just caught up with the price and it should add some more strength to the support area. It did provide support on Friday. Another bullish signal is the stochastic indicator which is oversold. It means that the retrace down is complete on the H1 chart. Now, we should see buyers come in and push USD/CAD higher again, so let’s wait.
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