For the Friday edition of DecaPip Daily I would like to look at the USD/CAD and identify some key technical levels and how we may be able to trade them in the near term.
The easiest way for me to articulate my thoughts is to show you the 2 hour price chart below which indicates we have broken down from critical support and currently trading under with room to fall.
As this a US Dollar pair we have to be aware of the overall Dollar technicals this week, as it currently trades the USD index has closed below it’s consolidation support for the second day and we may see further losses extend for US Dollar based pairs.
As the USD/CAD is currently longer term bullish we do have to trade with some caution if we would like to enter any sell positions on this particular currency.
A technical retest of the red trendline above located around 1.3133-44 looks to be a safe option where a smaller stop loss can be placed 20-30 pips above if the the key support now turned resistance can hold firm.
For now, USD/CAD traders may wait to see if a solid weekly reversal candle can form and more importantly a close under the 1.3133 technical level whilst also paying close attention to the USD Index weekly close for further confirmation.
Many traders will also be looking to buy into the currency pair at some point as the Canadian economy weakens and the US economy and labour market goes from strength to strength this year. On the chart 1.2840 is a very important level and should we trade down to that area it is a good area for buyers to step in for those traders who missed the sharp upward move on the pair.