[[USD/CAD]] has been pretty bullish for more than a month, since it reversed at the support zone above 1.30s. Crude Oil has been pretty bullish as well during this period, which should have turned the CAD bullish as well and this pair bearish, since the CAD is positively correlated to Gold.
But, the USD turned bullish last month, which had a bigger impact on this pair than the climb in Crude Oil prices. During this time, moving averages turned into support during retraces lower. First, it was the 100 SMA (green) and the 50 SMA (yellow) in the first week of November.
Then, the 200 SMA (red) turned into support for USD/CAD. Last week, it was the 50 SMA again where this pair war trading around. This week though, the 50 SMA was finally broken after the soft US ISM manufacturing report and Trump’s comments for postponing the Phase One deal until Chinese elections.
Although, the bearish USD move in this pair is much weaker than in other pairs, where the other currencies have climbed more than 100 pips against the USD. So, logic tells us that once the USD decline is over, USD/CAD will be the first pair to make the move higher in favour of the USD. So, we decided to go long on this pair at the 100 SMA, since this moving average is providing support on the H4 chart.
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