IFC Markets - Analytics

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    Technical Analysis USDCAD : 2015-03-25

    Expecting escape from 2-month range

    Yesterday the data on growing February CPI were released in the US. In theory, it points to increased likelihood of interest rate hike, so the dollar stopped falling. However we do not rule out the downtrend and would like to draw your attention to the USD/CAD currency pair. Canadian GDP (YoY) in the forth quarter rose 2.4 as core CPI increased 0.6%. US Gross Domestic Product (Q4) will be released on Friday, analysts forecast 2.4% growth. According to yesterday's report, American CPI added 0.2% in February which is that that much, compared to Canada. Taking into account interest rates (0.25% in the US and 0.75% in Canada) we assume that the Canadian dollar may strengthen. To be mentioned, no important macroeconomic releases are expected in Canada. We believe that USD/CAD dynamics will determined by the news from the US.


    USD/CAD has been traded in a range for 2 months on the D1 chart. Now it has moved to its lower boundary, traced by support line together with Parabolic and Donchian Channel. RSI bars indicates the bearish divergence: it is located below 50. USD/CAD deviated upward from the moving average. We do not rule out further bearish momentum if Doncian support and fractal low are breached at 1.2387: a sell pending order may be placed here. Stop loss may be placed below the average line between Donchian Channel and the local fractal low, which currently acts as support line - 1.2564. After pending order placing, Stop loss is to be moved every four hours near the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets Stop loss level without reaching the order, we recommend cancelling the position: market sustains internal changes which were not considered.


    Position Sell
    Sell stop below 1,2387
    Stop loss above 1,2564
    Dear traders. For the detailed report of the strategy based on analytical issues of technical analysis click here.

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