The Canadian Loonie has pulled back to my buying level, but now I'm not so sure.
Last time I featured the Loonie, or Canadian Dollar, I reckoned it was destined for parity with the US Dollar, but I wanted a pullback to C$1.0650 in order to enter the trade (Keep An Eye On The Loonie). The USDCAD reached my target yesterday-and kept on going! Today has seen a slight reversal, but the price is holding just above the C$1.0650 support & resistance line.
There's some quality resistance just around this level; in addition to the 50-day moving average at C$1.071 there's a trendline dating back to March's high. At the moment the C$1.0650 resistance is looking a bit of a pushover, though for me it's too early to be sure. A daily close will carry more weight.
The RSI and MACD readings support the upward move, but that's to be expected; when selling at a pre-determined level it means having the confidence to choose that technical analysis over other conflicting data.
No, it's not that that's concerning me; it's just that I'm allowing my view of the real world to interfere. Views on the US Dollar remain polarised. Many think it's bought a one-way ticket to Hell in a handcart; others think the commodity currencies have reached ‘good news' saturation point and have had their time in the sun. This view is given further weight with the sudden reversal of risk trades across markets this week. I've cried "wolf" too often, but if we do see the long-awaited sell-off in equities then USDCAD could rapidly return to the C$1.10-11 area.
Bank of Canada's Carney has been on the wires this afternoon, but hasn't affected the currency. Also, on the news front, Friday sees the release of Canadian GDP, following the US release on Thursday.
So, what's my next move? In the near term I think I'll make like a politician and sit on the fence. If I'm looking at a return to parity there's no need to rush in; I'd rather be more convinced that the long-term trend is still intact. Until I see a close below the C$1.0650 S&R line there's no trade for me.
If you're new to all this TA stuff I strongly recommend checking out the daily Trading Edge; it'll help you find your way around some of the TA triggers used and the charts which are showing one of more of those set-ups.
Happy Trading
