We’ve bought a significant occasion threat forward from each the U.S. and Canada, which might decide the directional bias on USD/CAD for the subsequent few weeks.
Right here’s a fast technical setup to regulate to prepare for various potential situations to play out.
USD/CAD Main Resistance to Maintain?
Proper earlier than we hit the weekend, we’ll get the latest employment updates from both the U.S. and Canada throughout the Friday morning U.S. buying and selling session. These are prime tier occasions for his or her respective currencies, so the likelihood is comparatively excessive that short-term volatility will decide up rapidly.
Expectations are for each international locations to indicate an enchancment to the roles setting, which might probably imply we could not see a directional spike proper off the bat. So, what we’re searching for is a divergence from expectations, both U.S. disappoints and Canada reveals progress, vice versa, to make this setup essentially legit.
If we do see a divergence in employment trajectories that favors the U.S., then that makes the earlier triple top on the each day chart above one to observe for a possible lengthy positions. If the market can maintain a break above the 1.2900 – 1.2950 vary, then that will attract technical patrons, in addition to broad threat sentiment gamers because the world leans risk-off throughout this Omicron variant uncertainty setting.
If the info reveals a weakening U.S. jobs setting vs. an enhancing Canadian job setting, then merchants could take the retest of that earlier triple prime as place to begin recent positions or take income from the latest rally in USD/CAD from roughly 1.2300 to 1.2800 in November.
With a each day average true range of round 80 pips, if we see both of those knowledge divergence situations play out, 1.2900 to the upside and 1.2700 to the draw back are cheap targets the place the market could run into one other block of restrict orders. One thing to contemplate when managing threat and setting exit orders.
What do you guys assume? Is USD/CAD set to make new highs earlier than the tip of the yr or is that this a good time to contemplate a brief place?
Let me know within the feedback beneath, and as all the time, bear in mind to by no means threat greater than 1% of a buying and selling account on any single commerce. Regulate position sizes accordingly. Create your individual concepts and don’t merely comply with what I do.
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