Thursday, March 3, 2016

Analytical review of the currency pair USD/CAD

USD/CAD
Technical data of the currency pair:

Previous closing: 1.3420;
Daily range: 1.3405-1.3447;
Opening: 1.3420;
52- week range: 1.1916-1.4692;
Annual revenue: +7.48%;
Change in % for the previous day: +0.16.


Analytical review:

  • Since the end of February the currency has traded in the range of 1.3500-1.3585. On Tuesday the currency pair managed to overcome and consolidate below support level of 1.3500.
  • The Canadian dollar hardly reacted to the improved sentiments in the market and positive US statistics.
  • On Tuesday important Canadian economic statistics was released. According to Canadian Statistical Department, GDP in December rose by 0.2%, which was above analysts’ forecast of 0.1%.
  • The Canadian dollar is a commodity currency and the rise in the CAD can be triggered by the positive dynamics in the price of oil. Since mid February the price of oil brand WTI rose by over 6 USD.
  • “Commitments of Traders” shows that over 62% large speculators believe that the CAD will strengthen. There are 110722 contracts opened for long positions; and 65818 contracts for short positions.
  • Some important US data will be released this week, which might have effect on the currency movement. On Friday 4 March US non-farm payrolls will become known.
Summary:
  • Over the past few months the Canadian dollar rose by 550 points. The currency quietly reacts to the US macro-economic statistics. According to “COT” large speculators believe that the CAD will become strong again.
  • In the near future the CAD will strengthen versus the USD. It is recommended to open short positions.
Trading tips for the currency pair USD/CAD

Long-term trading:
Prior to publication of non-farm payrolls on Friday the 4th of March exchange rate of the Canadian dollar is unlikely to change. At the moment we recommend to refrain from long-term transactions on the pair USD/CAD. We recommend to enter the market on Friday after the release of statistics and retesting of the key support and resistance levels and in case of respective confirmation (for example, a pattern Price Action).

Medium- term trading: at the moment the currency has broken down the local support level 1.3500. If the price maintains the levels of 1.3500-1.3550 and in case of respective confirmation (for example, a pattern Price Action), we recommend to open short positions. Risk per trade is less than 2.5% of capital. Stop-order can be placed slightly above the signal line. Take profit should be placed in parts at the levels of 1.3420, 1.3360 and 1.3320 with the use of trailing stop.