USDCAD find support buyers against the 200 hour MA
The USDCAD
USD/CAD
The USD/CAD is the currency pair encompassing the dollar of the United States of America (symbol $, code USD), and the Canadian dollar of Canada (symbol $ code CAD). The pair’s exchange rate indicates how many Canadian dollars are needed in order to purchase one US dollar. For example, when the USD/CAD is trading at 1.3500, it means 1 US dollar is equivalent to 1.35 Canadian dollars. The US dollar (USD) is the world’s most traded currency, whilst the Canadian dollar (CAD) is the world’s seventh most traded currency. The United States and Canada are geographical neighbors, and as a result there is a lot of trade between the two countries. Thus, there is often decent volatility and low spreads for the USD/CAD, typically between 1 and 3 pips on most foreign exchange brokers. Factors Influencing the USD/CADThere are a number of important economic or news releases that can affect the USD/CAD. This includes among others, Non-Farm Payroll data for the US that are released on the first Friday of each month. Such metrics tell us whether employment is rising or falling, while the Gross Domestic Product (GDP) for Canada or the US, measure the total value of all goods and services produced by the country. In addition, the USD/CAD is known as a “Commodity Pair”, as Canada possesses large amounts of natural resources, specifically oil, which is its most traded commodity. As a result, it’s important for long term speculators of USD/CAD to keep a close eye on crude oil developments due to the strong negative correlation.
The USD/CAD is the currency pair encompassing the dollar of the United States of America (symbol $, code USD), and the Canadian dollar of Canada (symbol $ code CAD). The pair’s exchange rate indicates how many Canadian dollars are needed in order to purchase one US dollar. For example, when the USD/CAD is trading at 1.3500, it means 1 US dollar is equivalent to 1.35 Canadian dollars. The US dollar (USD) is the world’s most traded currency, whilst the Canadian dollar (CAD) is the world’s seventh most traded currency. The United States and Canada are geographical neighbors, and as a result there is a lot of trade between the two countries. Thus, there is often decent volatility and low spreads for the USD/CAD, typically between 1 and 3 pips on most foreign exchange brokers. Factors Influencing the USD/CADThere are a number of important economic or news releases that can affect the USD/CAD. This includes among others, Non-Farm Payroll data for the US that are released on the first Friday of each month. Such metrics tell us whether employment is rising or falling, while the Gross Domestic Product (GDP) for Canada or the US, measure the total value of all goods and services produced by the country. In addition, the USD/CAD is known as a “Commodity Pair”, as Canada possesses large amounts of natural resources, specifically oil, which is its most traded commodity. As a result, it’s important for long term speculators of USD/CAD to keep a close eye on crude oil developments due to the strong negative correlation. Read this Term has spent most of the trading times since September 23 between 1.3543 to 1.38375. Yes, there was a move lower on October 4 and into October 5. There was a move above earlier this week on Tuesday. Both breaks were relatively modest before rotating back into the range.
Then today came along and there was a break and run to the upside. The move too the pair racing to the upside an all the way to 1.3977. That is a run of 140 pips above the upper extreme.
However, we know the result.
The buyers turned to sellers. Technically levels were broken on the downside that should not have been broken. When the price fell back into “the range”, there was more selling.
Please see my video HERE for my prelude to the sharp reversal lower. For the USDCAD discusssion go to 1:15 in the video.
That selling has now taken the pair to – and through – the 100 hour MA (blue line in the chart above), and then down to the 200 hour MA (green line in the chart above) at 1.37098 currently. The low just bottomed at 1.37061. There has been a modest bounce off the MA.
What now?
Going back to last Friday, the low price on that day also found support buyers against the 200 hour moving average. That increases the levels importance going forward. Hence the buyers willingness to lean against the level.
Putting it simply, risk can be defined and limited against the 200 hour moving average. If the price were to break below with momentum, dip buyers could sell and take a small loss. Conversely the dip buyers against the level are hoping that the USDs move back to the upside is reignited.
What might that look like?
Getting back above the swing level between 1.37526 at 1.37657 would be step 1 that area held resistance last Thursday last Friday and on Monday before extending to the upside. During trading yesterday, the area also held support (helped by the support buyers against the 100 hour moving average as well – blue line)
Get above that swing area and the 100 hour moving average 1.37831 would be the next target to get to and through. Move above that level and traders will be talking once again about the 1.3807 – 1.38375 swing area.
So buyers are stick a toe in the water after the sharp move to the downside.
The roadmap back higher is defined. It is up to the market traders to see if the sellers can now turn back buyers
This text was written byObserveWith mixed expertise of overlaying expertise corporations on Wall Road and dealing in Silicon Valley, and serving as an out of doors adviser to a number of seed-round startups,...
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