Technical Analysis USDCAD : 2014-09-23


Good afternoon, dear traders. Today at 14:30 CET Statistics Canada will release data on the relative change in the volume of Core Retail Sales. The indicator shows the demand for all categories of goods, except for cars which make up 20% of the total volume. This component introduces an exceptional volatility, as it does not provide average baseline consumption. This is why the car market is not taken into account when shaping consumer trend based on Core Retail Sales. This indicator measures consumer confidence and domestic demand trends of the Canadian economy. We assume that major investors would react to economic data, so we can count on an additional volatility momentum of the Canadian dollar.


Let us consider the daily chart of the USD/CAD currency pair. At the moment, the price moves within the daily and weekly uptrends. In this way, there is a bullish convergence, and it is confirmed by Donchian Channel (13) bias. We can see the confirmation of investor sentiment on the part of RSI-Bars oscillator: the signal entered the triangle area with the bullish direction. We expect the price retracement to be completed at the same time with the fractal resistance breach at 1.11033. This mark may be used for placing a pending buy order. There is a high probability that this movement would match with the oscillator resistance intersection at 68.82%, which forms the upper side of the triangle. There is no doubt that the breach would lead to Parabolic reversal towards the green zone, thus we would get the last required directional confirmation of the price movement. The initial Stop Loss can be placed at 1.08812, which is reinforced by the D1 trend line intersection.

Note that at the moment the Canadian dollar trading volumes do not confirm the trend: we record the downtrend. The intersection of 80 000 contracts should be considered as the first confirming signal. You can monitor the volumes of Canadian dollar futures and options traded on the Chicago Mercantile Exchange by clicking here.
After position opening, Trailing Stop is to be moved after the Parabolic values, near the next fractal trough. Thus, we are changing the probable profit/loss ratio to the breakeven point.
PositionBuy
Buy stopabove 1.11033
Stop lossbelow 1.08812
Dear traders. You can see the detailed report of the author’s account by clicking here. The current author’s position is indicated with the dotted line on the price chart.

Note

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