HomeContributorsTechnical AnalysisA Trading Idea for USDCAD While the Canadian Dollar is Under Pressure

A Trading Idea for USDCAD While the Canadian Dollar is Under Pressure

The Fed didn’t raise the key interest rate yesterday, as we expected. It was left at the previous level of 0.75-1.00%. The latest reports from the US appeared to be weak. But the Central Bank said that a slowdown of the GDP growth is temporary. They also announced that consumer spendings and the labor market are at a quite good level now. Everyone who work with the financial markets are optimistic about that comments. So, the probability of the interest rate growing has increased greatly. The FedWatch Tool is at the 73.8% level at the moment.

Source: cmegroup.com

We could notice strong purchases on the USD/CAD currency pair during the last 3 weeks. The Canadian dollar has lost more than 400 points against USD. It happened due to the negative dynamics on the oil market. Here is the chart where we can see that the WTI oil has decreased by more than 14% during the last month.

A current technical pattern on USD/CAD:

Support levels: 1.3700, 1.3535, 1.3415

Resistance levels: 1.3800

The Inside Bar is a classic PA pattern which has formed on the H4 chart. It indicates the continuation of the current trend. The price of the asset has fixed near the 1.3800 level and the main candle. Indicators show us the strength of buyers. The MACD histogram is in the positive zone, while the price of USD/CAD is above the 50 and 200 MA.

We’d advise to long this pair after it fixes above the 1.3800 round resistance level. Entry points should be searched for on the younger timeframes. It’s recommended to accompany this position with a trailing stop to fix the profit. The goal of this deal is 1.3875. We think that this asset can reach the 1.3950 level in the medium term.

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