By Guest Blogger Graeme Kennerley of Trade With Precision The weakness in the ‘Loonie’ continues as Canada’s economic outlook remains poor, there is even talk that economy has dipped into recession. This may or may not be the case, however what is evident is that Canada’s neighbour has gone from strength to strength with the US Dollar pushing higher. This long term disparity in strength is evident on the Weekly chart of USDCAD which has broken to new highs. Looking at the Daily chart below, notice that a retracement into the zone between the 10 and 20 moving averages has occurred. Yesterday’s candle can be seen as is bullish because it has small body to the upper side of the daily trading range and the tail to the underside demonstrates a rejection of attempts by the seller to move the price further to the short side Today’s trading action has opened near the top of the trading range and looks like it could possibly take out yesterday’s high, demonstrating a return to the overall trend to the bullish side as confirmed by the weekly chart. Notice how the 10, 20 and 50 moving averages are in the correct order and the MACD indicator demonstrates agreement with the uptrend. Today’s price action should demonstrate the sentiment on this pair and, rather than predicting a move, it will be best to await confirmation of a return to the uptrend or a continuation of the retracement. By watching the lower time frames ahead of the open of the European session in a few hours, the sentiment should be revealed. In particular I will be watching the 4 hourly charts for a confirmation of a break above yesterday’s high with trading opportunities this might bring.
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