Technical Analysis USDCAD : 2014-03-31

Good afternoon, dear traders. Today at 13:30 (CET) we will see the Canadian GDP (GDP m/m). This index is released on the basis of monthly data and includes an adjustment for inflation. The GDP growth rate increases from -0.5% to 0.4% which was planned for this month. Recall that the GDP determines the cost of goods and services produced within Canadian economy. Consequently, if the published values do not reach the projected level of 0.4%, we should expect a significant weakening of the CAD and the fall of Canadian economy attractiveness for investors.


Here we consider the USDCAD on the H4 chart. The bearish potential is exhausted because the price touched the more significant (larger scale) rising weekly trendline. At the same time there was the upward breakthrough of the resistance line by the RSI-Bars, that is the first warning of trend reversal. The Parabolic SAR confirms a new impetus since the signal values fell below the price level. It is impossible not to mention the fact that the price crossed the Pivot signal line and got fixed above it. We believe that it is appropriate to place a pending buy order by the CAD above 1.10764.

The stop loss is chosen according to the nearest minimum at 1.10409. The current risk limitation level is confirmed by the ParabolicSAR data and the first Pivot support. The preliminary target is acquired below the first 161.8% Fibonacci level according to historical data. The closest historical maximum in this area corresponds to 1.10926. The stop loss is recommended to be moved after the ParabolicSAR as soon as it crosses the advanced risk limitation level. The order is recommended to be open 15 minutes before the GDP Canada publication. We believe that the position should be closed immediately in case the figure is higher or equal to the projected inflation at 0.4%. This would mean that the trend has reversed and the market experiences fundamental changes which were not taken into account by us.

Position openingabove1.10764
preliminary targetbelow 1.10926
Preliminary stopbelow 1.10409


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