USD/CAD Extends Gains, 2017’s High In View - Forex News by FX Leaders

USD/CAD Extends Gains, 2017’s High In View

Posted Friday, December 21, 2018 by
Shain Vernier • 1 min read

A perfect storm of fundamentals has hit the Loonie this month. Plunging WTI crude oil prices, a U.S. FED rate hike, the G20 signing of USMCA, and lagging Canadian economic metrics have all spelled doom for the CAD. At press time, rates of the USD/CAD are trending north in the neighborhood of 1.3600. Fresh yearly highs are becoming a daily occurrence, with 2017’s high point of 1.3793 quickly approaching.

During the U.S. pre-market hours, Statistics Canada released their Retail Sales (MoM, October) report to the public. Both Retail Sales (0.3%) and Retail Sales Except Autos (0.0%) came in beneath consensus expectations. These reports have not been well received by the forex, as illustrated by the CAD losing ground vs the Greenback.

USD/CAD Technicals

Since the public signing of USMCA at the G20 by the U.S., Mexico, and Canada, the bull run has been on in the USD/CAD. Aside from a significant retracement on December 7, it has been up, up, and away.

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

Until the end of the year, here are three topside levels to watch for this market:

  • Resistance(1): Psyche Level, 1.3600
  • Resistance(2): Psyche Level, 1.3700
  • Resistance(3): 2017’s High, 1.3793

Bottom Line: In the face of such a strong uptrend, I have little interest in shorting this market using only a psyche level as topside resistance. However, in the event we see 2017’s high challenged, selling may be a good opportunity.

For the remainder of the year, I will have sell orders queued up beneath 2017’s high at 1.3774. Using an initial stop at 1.3826, this short-term position trade yields 50 pips on a sub-1:1 risk vs reward management plan.

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About the author

Shain Vernier // US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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