Short term
Trade view / 08 September 2016 at 13:26 GMT

USDCAD range play opportunity

FX Trade Strategist /
Instrument: USDCAD
Price target:
Market price:

USDCAD has bounced within a 1.2760-1.3200 range since mid-August and that range is likely to hold. USDCAD plunged from the 1.3100 area following a soft nonfarm payrolls number which lowered expectations for a September rate hike in the US.  

It found support at 1.2820 and the bounced following the Bank of Canada statement and a rebound in oil prices.

That the BoC was dovish should not have been a surprise. The Canadian dollar had been lagging gains made by AUDUSD and NZDUSD. A sceptic would believe that the BoC’s comment on risks to inflation was a subtle blessing to sell Canadian dollars.

USDCAD has been undermined by rising oil prices which have gained on speculation of Opec agreeing to a production cap. It is only speculation while at the same time oil production in Saudi Arabia and Russia is at record levels.

The intraday downtrend since breaking below the 1.3000 pivot comes into play at 1.2880 and was broken this morning suggesting a rebound to the pivot area.  The longer term uptrend line from the beginning of May comes into play at 1.2790. The 38.2% Fibonacci retracement level of the September 1.2820-1.3150 range is at 1.2945.

The USDCAD range has been your friend since May and should be trusted today.

Management and risk description 

A major risk to this idea is if Friday’s Canadian employment report surprises to the upside. The forecast is for a gain of 25,000-30,000 jobs which would merely erase the losses of the previous two months. The stop will be triggered on a rise in oil prices or if US data continue to be soft.


Entry: buy ½ USDCAD at market (1.2910), balance at 1.2860.

Stop: 1.2810.

Target: 1.3050.

Time horizon: five days.

USDCAD 30-minute take-profit level:
Source: Saxo Bank 

USDCAD four-hour highlighting Fibonacci retracement:
Source: Saxo Bank 

USDCAD daily with medium-term trendline:
Source: Saxo Bank 

USDCAD five-year daily with moving averages:
Source: Saxo Bank

— Edited by Michael McKenna

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Non-independent investment research disclaimer applies. Read more
izwansamba izwansamba
Tq mike
Michael O'Neill Michael O'Neill
UPDATE: Canadian employment data is due today.The forecast is 20K. This number is a roll of the dice. Cancel the second buy order at 1.2860. Raise stop loss to 1.2885.
Michael O'Neill Michael O'Neill
UPDATE-Part 2. Sell 1/2 of existing position at the market 1.2938-That would put your break even on the trade at 1.2896. Last month, most of the job losses were government workers which seems rather dodgy. . A big up number would trigger the stop
izwansamba izwansamba
tq mike for update. Do you any membership group? How much the cost?
fxtime fxtime
Great call Mike...looks like 1.300 + is a certainty.


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