How’s it going, comdoll comrades? I’m back with a long USD/CAD trade idea for this week! Check out my plan and tell me what you think:
First up, the technicals. USD/CAD recently made an upside break from the triangle pattern on its 4-hour time frame, indicating that further rallies could be in the cards. However, dollar bulls might need a quick pullback before pushing the pair any higher so I’m thinking a retest of the triangle resistance might take place. I’ve marked my “buy zone” on the chart above, as I plan to wait for the bullish divergence to play out and for reversal candlesticks to form before setting orders.
As for fundamentals, the Fed’s recent decision to keep tapering and Yellen’s hint that a rate hike might take place around six months after asset purchases end could keep the dollar supported. Meanwhile, BOC Governor Stephen Poloz recently remarked that he wouldn’t rule out a rate cut if downside risks to inflation persist. Just check out this snapshot of major central bank biases to see the difference between the BOC and the Fed!
US economic reports have been mixed so far and the Greenback might need a set of convincingly strong figures before USD/CAD bounce could take place. I’ll be keeping close tabs on today’s durable goods orders release and tomorrow’s pending home sales data to see if the dollar can recover soon. There are no major reports lined up from Canada for the rest of the week so this pair might take its cues from US data and risk sentiment.
What do you think? Make sure you check out our risk disclosure if you’re planning on taking this one too!
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This content is strictly for informational purposes only and does not constitute as investment advice. Trading any financial market involves risk. Please read our Risk Disclosure to make sure you understand the risks involved.