Technical Analysis USDCAD : 2014-07-31


Good afternoon, dear traders. Today the key events of this evening are considered to be the release of the monthly GDP Canada m/m and Unemployment Claims, the U.S. Both indicators can have a significant impact on the USD/CAD exchange rate. However, we expect that GDP is the most significant indicator. Let us recall that this index expresses the change in the value of products and services produced in Canada over the past month, adjusted for inflation. The GDP allows us estimating the integral economic indicators, meanwhile Unemployment Claims estimates only domestic demand and potential consumer lending. In addition, Unemployment Claims is published on the weekly data basis, and therefore its statistics is less significant than the GDP.

The daily volumes of futures and options traded on the Chicago Mercantile Exchange are presented on the chart below. We can see that the Canadian uptrend turning point is not observed: the trading volume increased and outperformed the mark of 75 000 contracts, and that means we can expect the growth continuation. You can monitor trading volumes for this currency pair by clicking here.

Congratulations for everyone who opened a long position at 1.08039 together with the author according to technical analysis of July 28. Profit continues to grow, and as soon as a new fractal trough is outlined, Stop Loss should be placed slightly below, changing the position to the breakeven point. We can increase the position volume according to the new situation. At the moment, the price broke the daily trend resistance line, which may lead to accelerated growth, especially that the distance between the price and Parabolic signal continues to increase. It should be mentioned that the DonchianChannel peaks are updated without temporary corrections: the game becomes dangerous. That is why it is recommended to wait for the leading RSI-Bars oscillator level breach at 67.91382. This signal will confirm the bullish confidence. In this case, a new order can be opened above the next fractal peak at 1.09657. It is expected that the next support will be located near the previous resistance, a position reversal effect. Precisely for this reason, preliminary risk limitation is recommended to be placed at 1.08039.

There is a little possibility for the trend reversal due to unforeseen fundamental factors, such as unexpectedly drastic changes of the Canadian GDP. In this case, a strong bearish momentum: a short position can be opened below a new support at 1.08039. After one of the orders being executed, Trailing Stop is to be moved after the ParabolicSAR values, near the next fractal trough (long position), or peak (short position). Thus, we are changing the probable profit/loss ratio to the breakeven point.

Directionup
Buy stopabove 1.09657
Stop lossbelow 1.08039

Directiondown
Sell stop below 1.08039
Stop loss above 1.09657

Note

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