USD/CAD Tests Daily Resistance

Posted Monday, December 23, 2019 by
Shain Vernier • 1 min read

Despite a collection of sub-par Durable Goods (Nov.) numbers and firm WTI pricing, the Greenback is gaining ground on the Loonie. Going into the midpoint of the U.S. session, the USD/CAD is up slightly. Consequently, two key levels of daily topside resistance have come into play. 

Today’s pre-market hours featured figures from November’s U.S. production sector. All in all, things didn’t look too good:

Event                                                                  Actual        Projected       Previous

Durable Goods Orders (Nov.) -2.0%              1.5%                0.2%

Nondefense Capital Goods Orders (Nov.)      0.1%               0.2%               1.1%

To summarize, Durable Goods missed the mark badly and Nondefense Capital Goods Orders also slumped last month. However, the U.S. housing sector showed signs of growth. New Home Sales (MoM) grew by 1.3% in November, punctuating a strong fall season for real estate. 

Aside from the U.S. metrics, the key market driver in today’s USD/CAD market was Canadian GDP (Oct.). The report came in at -0.1%, beneath expectations of 0.0%. Although only a monthly figure, the negative news has the Loonie in a holding pattern.

USD/CAD Challenges Topside Resistance

For the past two sessions, the USD/CAD has challenged topside resistance in the 1.3175 area. At this juncture, the intermediate-term bearish trend of December remains intact.

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

Here are three levels to watch in this market until the holiday break:

  • Resistance(1): 38% Retracement, 1.3167
  • Resistance(2): Daily SMA, 1.3179
  • Support(1): Swing Low, 1.3102

Bottom Line: Currently, WTI crude oil pricing is consolidating near $60.00 amid moderate participation. In the event it falls beneath $60.00, the USD/CAD is likely to drive above daily resistance.

Until elected, I will have buy orders queued up from above last week’s high at  1.3187. With an initial stop loss at 1.3144, this trend-busting trade produces 40 pips on a slightly sub-1:1 risk vs reward ratio.

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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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