Technical Analysis USDCAD : 2014-05-12

Good afternoon, dear traders and investors. Today at 18:00 (CET, server time), we expect the report from the president of the Federal Reserve Bank of Philadelphia, Charles Plosser. The speech is planned to be held at the University of Delaware. As Plosser is a member of the Federal Open Market Committee of the U.S. Federal Reserve and has the right to vote, his vision for the future monetary policy is important for investors. New predictions about the changes in the base rate from the U.S. regulator, which can affect the expectations of investors and currency traders are possible.
Two hours later after the speech, we will see a new part of statistics such as monthly report from the Ministry of Finance regarding the U.S. budget (Federal Budget Balance). The indicator will be published at 20:00 CET. This figure represents the difference between income and expenditure in the budget for the previous month. The preliminary signal of the budget deficit is the excess in social spending over tax revenues and investments. While social programs are maintained, this figure indicates the economy weakening and the lowering interest in it on the part of investors. Nevertheless, the previous month’s budget deficit fell by 81% and currently there are all reasons for optimism. In conclusion, it should be noted that we should expect new market signals for the U.S. currency after 18:00 and that is the good time to enter the market being based on the technical analysis results.


Today we take a look at the USD/CAD on the H4 chart. The D1 and the H4 trends are agreed and influenced by the bears. The correction end observed at the moment is a convenient opportunity for opening a short position from the resistance line. The RSI-Bars is in the overbought area and we should expect the correction end in case the level 48.3193 is violated. We believe that conservative traders should place the GTC buy order on the CAD below the previous support level at 1.0818. This level is comfortable for entering the market, as it coincides with the historical trend of the ParabolicSAR and the PivotPoints first support. When the support line is crossed we will see the parabolic automatically reversed towards the bearish side.

The first target is located at 1.08148 and also corresponds to the historical PivotPoints support channel level. The preliminary SL is to be located around 1.09068 and that is an important "sniper" position, characterized by the bearish trend line and the resistance level intersection. Nevertheless, it is important to move the SL after the Parabolic SAR every 4 hours. Thus, we optimize the return/risk ratio in our favor down the process of changing the market conditions. It is recommended to cancel the GTC sell order if the price crosses the SL level before the GTC is done.

Position openingbelow 1.08148
Preliminary target above 1.07892
Preliminary stop lossabove 1.09068


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