Technical Analysis USDCAD : 2014-06-17

Good afternoon, dear traders. Today in the evening (14:30, CET) we expect the publication of the two U.S. macroeconomic indicators: Building Permits and Core CPI m/m. Both indicators are released at the same time, but today a change in the first indicator only is predicted, from 1.08 million to 1.07 million building permits. Since the CPI is the inflation index and can be interpreted in a contradictory manner, we should focus primarily on the first indicator. It comes out in monthly terms and shows the number of the new building permits issued by the government. The indicator allows assessing the potential growth of the real estate sector, the increased demand for secondary commodities and technological goods. Construction allows creating an impulse for domestic consumption and production in the country. If the actual value is within the predicted level, or below, then we should expect the weakening of confidence among investors and of the U.S. currency consequently.

Here we consider the USD/CAD currency pair on the H4 chart. The price moves within the H4 daily downward trend. The ParabolicSAR trend indicator and the RSI-Bars oscillator confirm the direction. Moreover, the price crossed the PivotPoints signal line downwards, simultaneously with the formation of the ‘balance’ candlestick pattern. This model is marked in yellow on the chart and indicates the completion of a short-term correction.

Pending sell order is to be preliminary placed below the key fractal minimum at 1.08342. This level is confirmed by the PivotPoints historical support. Stop Loss can be chosen at Bill Williams resistance fractal at 1.08805, which coincides with the historic value of the ParabolicSAR indicator and the first PivotPoints support. Opening a position, it is recommended to move Stop Loss after the parabolic values every 4 hours after the order execution. Thus, we can optimize the return/risk ratio in our favor in the process of changing market conditions. If you decide to take a break from the market, the automatic Trailing Stop can be placed, taking the distance between the two previous fractal peaks into account. This distance is indicated by the double arrow on the chart above.

Position openingbelow 1.08342
Stop loss above 1.08805


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