Potential signal:
- I am a buyer of the USD/CAD pair on a break over the 200 Day EMA, with a stop loss of 100 points.
- I have a target of 1.3980 above.
The US dollar has risen quite nicely against the Canadian dollar during the trading session on Tuesday to reach towards the 200 day EMA. The 200 day EMA currently sits at the 1.3878 level and is going to offer significant resistance from a technical analysis standpoint. And in fact, it already has.
On a Move Higher
If we can break above the 200 day EMA, then the market is likely to go looking to the 1.40 level. I've been buying this pair for a while now, and I do think that we continue to see a lot of buy on the dip attitude. You can see that we had a double bottom at the 1.3550 level, and since then, I have been picking apart this pair to collect interest rate swap and of course, I believe a market that is trying to bottom for a longer term move.
This does make a certain amount of sense because Canada, unlike huge trading partners with the United States does not have a trade agreement and seems to be doubling down on fighting that. And this of course is going to be bad for the Canadian economy, which sends 80 % of its exports into the United States.
Short-term pullbacks I believe opportunities to buy the market remain with the 1.3750 level and the 50-day EMA both offer support. All things being equal, this is a market that I do believe will continue to try to break above this 200-day EMA and then eventually go breaking not only to the 1.40 level, but possibly even higher. Short-term pullbacks, I think, only offer opportunities. I have no interest in owning the Canadian dollar, regardless of what the US dollar does elsewhere.
Top Forex Brokers
I think the uptrend stays intact and we make another run toward the highs, especially when you see things like the peace talks at the White House during the trading session and the previous session include major European leaders, but not the Canadians. The situation between the United States and Canada will eventually hurt Canada significantly. And I think currency traders are finally coming to grips with that reality.
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