USDCAD fails to break the full support level.

The USDCAD fell below support level 1 at 0.9858, but could move to support level 2 at 0.9850 level.  The price has moved back above the 0.9858 level and should lead to bulls wrestling some control again.  A move below 0.9850 should not be faded however.

USDCAD contained in a narrow range, but does it provide an opportunity?

A reader of the commentary emailed me with the following comment

“USD/CAD is in 3rd day in this 53 pip or less range. The last time this happend started on February 14 2007 for 4 days and than on March 22 2007 for 3 days. That’s the 2 times since 2006. I guess in February traders don’t like USD/CAD…”

When the range is contained and non-trending, it increases the chances for a trend type move.  The reason is non-trending markets tend to transition into trending markets.  Although in Feb 2007, the market remained consolidative, in March 2007, the nontrending period was the beginning of a sharp move to the downside.

Is there another move in store in 2011?  Could be.  In fact, it is a good time to anticipate a trend type move as risk can be small while the potential for a trend move tends to be higher.  The question becomes “Which way?”.

When the market is non -trending like it is, I believe what the market is telling me.  To me the market is saying “I don’t know what the next move is going to be”.  After all, if it knew, it would go there. 

Most peopletraders try to guess. I prefer to see what “the market” (with the proxy being the price and technical tools) is saying. To do that, I like to focus on the key technical levels using MAs, trendlines, and/or Fibonacci retracements.

In the hourly chart above the range over the last 3 days is clear. There is support at the 0.9858 and 0.9850 levels, and resistance at the 0.9888 and the 0.9902/05 levels.  With the current price in between these extremes, the “market” is still saying “I don’t know”.  At some point, the price will look to make a break.  Look for a breach of the initial price, followed by the next level to provide the clues. On a break, look for the levels outlined to become support/resistance (dependent on which way it breaks).  Also look for increased momentum and the target steps to be overtaken (follow the arrows).  As long as the targets are reached, the trend continues. Manage the stops by following the market and key levels higher or lower (dependent on the break direction). 

If the break fails.  That is if the low level is taken out but no momentum is found and the price reverses, simply get out. Regroup. If the momentum does show up and targets are reached and breached, anticipate the trend to continue and manage the trade with this idea in mind.

It may be time to anticipate a trend in the USDCAD. Watch closely and be aware.

USDCAD moves toward support. Range tight today.

The 200 hour MA at the 0.9923 level is the target support for the USDCAD.  This level should provide support but if it gives way, expect further selling. 

The pair has been mired in a narrow trading range today with a high at 0.9954 and a low at 0.9928.  The Average True Range over the last 22 trading days (a proxy for a month of trading) is at 73 pips (see daily chart below) .  The 26 pip range today, suggests that there likely will be an extension at some point today. As a result, anticipate a move in the North America session today.

For traders you can anticipate a move on a break of either extreme. If the price moves above the 0.9954 level look for additional buying (use a tight stop -10/12 or so pips below the break point) . Conversely, a break of the 0.9928 level (followed by a move below the 200 hour MA) should signal lower levels for the pair (protect with a similiar tight stop of 10-12 pip).  The trade is simply a range extension play. If  a normal range is anticipated, the pair should have some room to roam in whatever direction the pair breaks.

Rocks, Paper, Scissor? $ strength trumps CAD$ strength

Spending higher, Income lags. Savings rate down. EURUSD tests 1.3720

With spending rising by 0.7% and incomes lagging with a 0.4% gain, the savings rate fell to 5.3% from 5.5%. PCE core continued to be tame with an unchanged reading.

In Canada, GDP rose by 0.4% vs 0.3%. Inflation as measured by Industrial Product prices rose by 0.7% and Raw Material Price Index rose by 4.2%.

EURUSD is testing the next upside resistance at the 1.3720 level.

The USDCAD has moved lower on the better data and is now below the 0.9976-82 level. It is testing the next support level at the 100 hour MA and the underside trendline at the .09966 level.  Watch the 0.9976 to 0.9982 level for clues.  If the price can stay below these levels, the bias remains lower for the pair, with 0.9932 the next key support.

Key technical levels in the USDCAD to eye through US GDP

The Weekend Technical Forex Report is available

The Weekend Technical Forex Report featuring FXDD’s Greg Michalowski is available for viewing.

Canada data sends USDCAD higher. 0.9929 area still finding sellers

The 0.9929 level is being tested again as the weak Manufacturing sales has sent the price higher toward the key level. The 0.9929 level was the spike low in the USDCAD going back to April 2010.  A break above should solicit additional buying with a target of the 0.9977 level being the next key level.

The Bank of Canada Monetary Policy report will be released at 10:30 AM. Comments on export weakness may send the pair through the key level. On the downside, look for buyers against the 0.9900 level with a move below, a concern for the dip buying bulls.

« Previous Page — Next Page »