USD/CAD is sitting right in the middle of its ascending channel on the 4-hour time frame, and the BOC statement could determine where the pair is headed next. Here’s what I’m looking at.
USD/CAD Trade Setup
Price is finding support at the mid-channel area of interest, which happens to be the bottom of a shorter-term ascending channel. A bounce off this level could take it up to the resistance around the 1.3300-1.3350 levels while a break could spark a selloff to the bottom at 1.2900. Stochastic is turning higher, which suggests that the odds are in favor of buyers at the moment.
The upcoming BOC interest rate decision could provide the direction that USD/CAD is waiting for, as an upbeat statement could trigger a drop below the 1.3100 handle while a dovish one could mean a Loonie selloff. In Forex Gump’s latest Economic Snapshot for Canada, he mentioned that a few green shoots are materializing in terms of trade while employment and manufacturing have picked up in September.
Other factors that could influence USD/CAD price action include the crude oil inventories report, which might show an increase of 2.2 million barrels in stockpiles, lower than the earlier gain of 4.2 million barrels. The earlier API report indicated a surprise draw of 3.8 million barrels so the upcoming release might reflect similar figures, which might be bullish for the Loonie as well.
As for the Greenback, only the U.S. building permits and housing starts are up for release today. If the pair fails to establish a clear direction with these catalysts, traders might take their cues from the Canadian CPI and retail sales figures up for release on Friday. As you’ve probably guessed, I haven’t set any actual orders yet since I plan on watching price action closely before hopping in.
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See also: Q2 2016 Trading Performance Review