View previous analysis: USDCAD holds steady at 2009 highs
Whilst oil prices have continued to decline, large speculators have increased their net short exposure of Canadian Dollars to record levels whilst the Greenback retains its bullish status. These forces combined have seen USDCAD shoot to multi-year highs and now on the cusp of testing the 1996 and 2007 lows.
At time of writing we are trading just below the 11 year highs which suggest s a bullish breakout is on the cards. Breakouts in the FX markets are rarely my preferred option but, due to the bullish sentiment surrounding USDCAD, is a scenario more likely than pulling back to 1.310-12 support before the trend resumes. As there is a relatively small bullish candle on H4 we could use the low to help with stop placement (and increase reward to risk) to target the 1996 lows.
That said if we do see a pullback before trend resumption then we may be able to increase the reward to risk potential with a buy-limit order.
USDCAD on cusp of printing fresh 11-year highs
As previously mentioned USDCAD has continued to favour vanilla buy-the-dip strategies and, for the foreseeable future, I do not see any immediate risk to this trend changing.