wti rally

USD/CAD Breaks To The Bull, Yearly Highs In View

Posted Tuesday, November 20, 2018 by
Shain Vernier • 2 min read

The stock, commodity, cryptocurrency, and currency markets are alive as we roll into the late U.S. session. After a brief rally to $4800, Bitcoin is trading beneath $4500 on global cash markets. WTI crude oil is pushing lows near $53.00 and U.S. indices are trading to the bear. For the Greenback, one of today’s strongest performers has been the USD/CAD .

Several market fundamentals are poised to impact the USD/CAD in coming sessions. Both the API and EIA crude oil inventories numbers are to be released as usual in the next 24 hours. However, U.S. liquidity providers will begin leaving the office Wednesday afternoon in observation of the Thanksgiving holiday. This will bring tight trading conditions ahead of Friday morning’s Canadian CPI reports.

USD/CAD Technical Outlook

Bids are hitting the USD/CAD in mass, driving rates above the 1.3275 handle. Traders are currently looking for ports in the equities, WTI, and cryptocurrency storms. As a result, the USD is becoming an attractive destination.

USD/CAD, Daily Chart
USD/CAD, Daily Chart

At press time, topside resistance at the USD/CAD daily Double Top Pattern (1.3263-64) is under siege. Forex traders are giddy over the prospects of another build in crude oil and are betting against the Canadian dollar. Subsequently, a bull run at yearly highs is developing.

Bottom Line: Until elected, I will have sells queued up from beneath the yearly high at 1.3379. With an initial stop at 1.3406, this trade returns 25 pips on a sub-1:1 risk vs reward ratio.

In the event that crude oil supplies come in positive, be on the lookout for a test of yearly highs in the USD/CAD by Friday’s Canadian CPI. While CPI will bring significant action to this market, a directional move north may occur before its release. The combination of positive oil inventories reports and limited holiday forex liquidity may act as catalysts for an extended rally.

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