Two most vital break points in USD/CAD inside the larger picture over the next days are 1.3121 and 1.2909. A break of 1.2909 takes USD/CAD to 1.2856. Despite 1.2909, long points begin at 1.2920, 1.2950 and 1.2976.
Above, USD/CAD runs into a brick wall and sell point at 1.3085. USD/CAD runs higher by breaks at 1.3005, 1.3020, 1.3027, 1.3053 and 1.3067.
The drivers to USD/CAD are 1.3191 and 1.3316. Both are currently oversold as well as USD/CAD averages 5 to 100 day. Both lines however are dropping on current prices. Caution is warranted at the 1.3121 area.
Best strategy for USD/CAD is long because its the path of least resistance due to the CAD side of USD/CAD. CAD on the USD side contains serious problems and is far to high and its the same phenomenon seen in EUR/USD this morning.
I suspect GBP/USD will see the same problems because CAD and the BOC system is closely aligned. The BOC adopted the BOE money market system and applied slight tweaks to its own exchange rate advantage in relation to USD. Note how GBP/USD at 1.2500 and USD/CAD at 1.3000 is only a 500 pip difference. If this relationship compresses any further then watch out for a huge breakout move.. Because the BOE and BOC are in love with averages, trading GBP and CAD pairs by moving averages or other math formulas associated with MA’s is quite acceptable. Look for moves to come in 60 pip increments and USD/CAD as the better mover to GBP pairs.
Overall look for sell 1.3085 and longs at about 1.2950’s and 1.2960’s.
Other requests? feel free anytime. My arsenal is 476 currency pairs.
Brian Twomey , Inside the Currency Market, btwomey.com