Inside the Currency Market: USD/CAD

USD/CAD volatility is derived from its wide wide ranges. CAD has plenty of room to roam. A few facts to understand. Daily ranges are valued at current 33 pips, that gives us intervals valued at 18 pips. This is terrific volatility. USD/CAD has ability to fly higher. Fly higher means we could see 1.4000’s in time especially if Big Sis Yellen decides to raise Fed Funds. But fly higher is exactly what the BOC wants to see as it views a higher USD/CAD as a stimulant to Canada’s economy and exports. From the BOC side, CAD is 0.7562, its historic average is right at about 0.9900 so its 2500 pips off its historic long term average. Its not a terrible situation for Canada and the BOC considering the 1990’s saw USD/CAD at 1.5500’s. USD/CAD can easily handle higher levels without causing economic disaster.

The direction for USD/CAD is higher especially as supports are many and strong and begin from 1.2000’s and upward to 1.3000’s. The strongest and immediate supports below exist at 1.2540 and 1.2667, both are rock solid. Above and strongest resistance begins at 1.3803 and 1.3962, those points are solid, for now. So overall range and note the wide distance 1.2667 – 1.3803, that’s 1136 pips.

USD/CAD. Bottoms, 1.3091, 1.3108, 1.3147. Bottoms are range points, actual bottom 1.3157. We missed the downside. Range above 1.3299, 1.3339. Most important points above 1.3223 and 1.3251. Strategy. Longs above 1.3223, target 1.3275, 1.3290, 1.3301. Top of the channel 1.3328. Caveat to channel top, this morning channel top was hit at 1.3268 exactly and drifted to current bottom at 1.3116. The strategy is long USD/CAD.

We are currently 1 hour from China opening. To be more perfect in our trades, I will post again around 10:00 p.m. EST.


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