2016-08-22 11:55:37

Technical performance:

Prev. closure: 1.2870; Daily range: 1.2873-1.2930;
Opening: 1.2888; 52-week range: 1.2458-1.4692;
Annual profit: -2.12%; Previous day's change (%): +0.70.

Analytical review:

  • In the past 2 weeks, the Canadian dollar has significantly grown in price against the US dollar (by over 400 points). During Friday's trading session the currency pair held firmly at a support level of 1.2785, which triggered off market correction.
  • Important statistics on Canada's economy were released last week. The retail sales index dropped to -0.8% against a previous value of +0.8%, Statistics Canada said Analysts predicted a value of +0.3%;
  • The Canadian dollar belongs to commodity currencies. Lower oil quotes put pressure on the currency. WTI oil lost over 1.5% during the Asian trading session.
  • Technical analysis also suggests eventual correction for USD/CAD. The price consolidated above a resistance level of 1.2905. A classical reversal pattern of the "Price/Action" method - Inside Bar - formed on the H4 chart.
  • The Commitments of Traders Report provides ambiguous data. Huge operators increased long positions by 1014 contracts. Short positions were increased by 4296 contracts.

Summary:

  • Weak macro-economic data from Canada and a drop in oil quotes put strong pressure on the dynamics of the USD/CAD pair. Technical analysis points to an eventual correction for the Canadian dollar. According to COT report, huge operators are not definite about the CAD.
  • So, we expect that the CAD will weaken against the USD in the nearest future. We advise you to search for market entry points to open long positions.

Trading tips for USD/CAD

Key levels:
Support levels: 1.2905, 1.2785, 1.2680
Resistance levels: 1.3025, 1.3120

Medium-term trading, H4
The currency is currently trading near a mirror support level of 1.2905. Once this level steadies and relevant confirming signals appear (Price Action patterns, for example), we recommend searching for market entry points to open long positions. Risk per trade: no more than 2% of equity. Stop order shall be placed a bit below the signal line. We recommend that prospective profits should be fixed partly at the levels of 1.2975, 1.3020 and 1.3060, with Trailing Stop applied.

Medium-term trading, H4
Medium-term trading, H4

Short-term trading, M15
The currency is trading at 1.2890-1.2925. We advise you to search for market entry points once this zone is broken and tested. Positions shall be opened in the direction of the signal line and the nearest support/resistance level. Risk per trade: no more than 3% of equity. Stop order shall be placed a bit above/below the signal line. Prospective profits shall be fixed partly, at 50%, 30%, and 20% of a prospective fluctuation, with Trailing Stop applied.

Short-term trading, M15
Short-term trading, M15