Several Trading Ideas After the Meeting of the Bank of Canada

Since mid-December 2017, USD/CAD has been traded aggressively. During this period, the Canadian dollar strengthened against the US dollar by more than 450 points. We can distinguish several factors that supported the demand for the currency of Canada:


- Publication of the positive statistics on the labor market, GDP and the inflation level in the country;

- The positive dynamics of the oil quotes;

- The possible tightening the monetary policy of the Central Bank of Canada.

usdcad18011

Summary of the projection for Canada

A reversal pattern has been formed on the chart. I dont exclude a technical correction of the USD/CAD quotes in the nearest future.


The Bank of Canada held a meeting yesterday. The regulator raised the key interest rate by 25 basis points as it was expected. Nevertheless, USD/CAD closed the trading session in the positive zone, since this event was already included to the price. The head of the Central Bank Stephen Poloz remains concerned about NAFTA. The regulator said that the further decisions on the rate will be taken with caution, depending on the economic indicators dynamics. The Bank of Canada published ambiguous economic forecasts.

usdcad18012

Source: www.bankofcanada.ca


These events can cause a corrective movement on the USD/CAD currency pair in the short term.


Let's look at the
current technical pattern on USD/CAD


Support levels: 1.24000, 1.23650

Resistance levels: 1.24700, 1.25500, 1.25800

usdcad18013

USD/CAD is in the flat now. From the beginning of this week, strong support and resistance levels were formed: 1.24000 and 1.24700, respectively. Indicators dont show us any accurate signals. The price has crossed 50 MA and 200 MA. The MACD histogram has begun to rise. I recommend you opening positions from the key levels.


I expect a correction of the USD/CAD currency pair, if the price fixes above the 1.24700 resistance level. The pair may potentially move to the key offer zone that is in the 1.25500-1.25800 range. The divergence of price and MACD histogram can be a confirming signal of the upward trend emergence.


An alternative option. It is better to sell USD/CAD, if it fixes below the 1.23650-1.24000 demand zone. The pair may potentially move to the 1.23000 round level.


I advise you to use a trailing stop for both positions.