IFC Markets - Analytics

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    Technical Analysis USDCAD : 2015-04-06

    ISM Non-manufacturing PMI

    Non-Farm Employment Change was published last Friday. Comparing to the previous month performance, it dropped more than 50%, causing the weakening of the US dollar against the most liquid currencies. It was also encouraged by the oil demand recovery due to the Yemen conflict. We expect a long-term market reaction to labour statistics (up to one week). ISM Non-manufacturing PMI will be published today at 16:00 CET. The index is released monthly, on the third business day, by the US Institute for Supply Management. It is a survey of more than 400 purchasing managers which are asked regarding employment, prices, suppliers and inventories. If the index is below 50, the activity reduction indicates economic recession, especially if the trend is maintained for several months. The given fundamental indicator might result in volatility soaring among currency pairs with the US dollar.


    Let’s examine the USD/CAD currency pair on the H4 chart. Straight away, please pay attention to the RSI-Bars oscillator which broke the local trough at 27% level, meanwhile the price approached the support level at 1.24050. It can be considered as a significant indicator at the sideways market; moreover, the downtrend price channel persists. Sell position may be opened below the fractal at 1.24050 with Stop loss placed above the last Parabolic point. The support level has already been confirmed by the price movement for three times, and therefore, we suppose there might be a return to the average scenario if the logical breakout is not followed afterwards. In this case, Buy position may be opened above the resistance fractal at 1.25078 with Stop loss placed below the key support level. After one of the two orders being activated, the second one is to be deleted: the market has chosen the price direction.
    After pending order placing, Stop loss is to be moved every four hours following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point.


    Position Buy
    Buy stop above 1.25078
    Stop loss below 1.24050


    Position Sell
    Sell stop below 1.24050
    Stop loss above 1.25078

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