Trade Update: USD/CAD Break and Retest

Weaker than expected U.S. GDP brought USD/CAD down to the 1.3000 area last Friday, causing my second position to get filled. Think I should hold or fold? Before reading on, make sure you review my initial trade setup and fundamental arguments for entering a long USD/CAD position.

I was looking at potential entries around the broken triangle resistance and area of interest, but it looks like price has pulled all the way down to the rising channel support near the 1.3000 major psychological mark and 61.8% Fib. So far, this area seems to be keeping losses in check and might continue to hold as a floor.

USD/CAD 1-hour Forex Chart

USD/CAD 1-hour Forex Chart

Even though the downbeat U.S. advanced GDP reading seems to have doused Fed rate hike expectations for September, let’s not forget that Canada also printed a dismal monthly GDP reading with a 0.6% monthly contraction for May. To top it off, falling crude oil prices have been weighing on the oil-related Loonie these days as oversupply fears resurfaced.

Looking ahead, we’ve got the U.S. and Canadian jobs figures up for release later on this week so I’m counting on additional volatility for this pair. Analysts are projecting a 10.2K rebound for Canada’s labor market while hiring in the U.S. could slow from June’s 287K to just 180K for July. I’ll have to keep close tabs on earlier jobs releases such as the labor components of the ISM surveys and the ADP non-farm employment change release to get a better gauge of how the actual NFP might turn out.

For now, I’m keeping my positions open on USD/CAD, ready to make adjustments depending on how the crude oil story unfolds.

As always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.

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