1.3500 Is The Key Number In The USD/CAD - Forex News by FX Leaders

1.3500 Is The Key Number In The USD/CAD

Posted Thursday, April 25, 2019 by
Shain Vernier • 1 min read

These days, there is a lot going on in the USD/CAD. Shifting central bank policies, active WTI crude oil pricing, and the battle over USMCA ratification are three issues that have been impacting the Loonie. The doldrums of early-April are certainly over and the USD/CAD is now open for business.

Wednesday’s dovish commentary from Bank of Canada (BoC) Chairman Poloz sent the Canadian dollar reeling. Traders piled into the long side of the USD/CAD instantly, doubling weekly gains. The final result was a test above 1.3500, a level not seen since January. At this point, 2019’s high of 1.3662 is coming into view.

USD/CAD Rallies, 1.3500 Is Key

Perhaps the most fascinating observation from the USD/CAD daily chart is the pending Daily SMA/Bollinger MP crossover. This will be the third of April, an extremely high volume of the indicator and a signal of choppy market structure. However, this particular crossover suggests that the current bullish action is becoming exhausted.

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

Here are the levels to watch until week’s end:

  • Resistance(1): Key Number, 1.3500
  • Support(1): 38% Current Wave, 1.3426

Bottom Line: It is tricky fading a strong trend and should always be done with caution. Given a tightening WTI crude market, and pending U.S. GDP release, taking a late-week long may be the best short-term play on the board for the USD/CAD. Of course, we need a decent retracement to occur first.

As long as the Swing High (1.3520) remains intact, buys from just above the 38% Current Wave retracement at 1.3431 aren’t a bad way to play this market. With an initial stop loss at 1.3394, this trade yields 30 pips on a slightly-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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