I’m seeing a potential short-term forex trade setup on USD/CAD, which has been in a serious downtrend since the beginning of this year. Nothing special to this setup as it is a simple downtrend pullback, with possible resistance at the broken support area around 1.3250. This is also the 61% Fibonacci retracement area and we’re seeing the stochastic indicator showing potentially overbought conditions, so there is a possibility shorter-term players could take interest in this area.
Fundamentally, today’s bounce higher is likely on oil industry data showing a build up of crude oil inventory, which also is the likely driver for risk-off sentiment taking hold across all global markets today. This type of sentiment tends to support the Greenback, and when you have a potential scenario of FOMC rate hikes coming up soon, it’s no wonder why we saw gains in the Greenback against the majors on the session.
With the fundies and technicals at odds at the moment, I’m in watch mode to see which one gives or if market themes change to line up with a sweet technical setup. This could be the case when we get a few U.S. economic data points before the end of the week, most notably the U.S. durable goods and GDP data releases. If the former comes in below previous reads, then it may make sense to hop in this extended downtrend, right?
What do you guys think? As always, I’d love to get your feedback on my trade ideas!
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