It looks there's a bit of retracement in USDCAD today, and this may be an opportunity to jump in the risk aversion moves that we are currently seeing.
On the chart, we can see the pair broke above last week's high around 1.1450. It looks like the pair has found major resistance around 1.1550 and currently falling back. Is last week's high resistance-turned-support? I don't know, but there's a good chance traders would watch that area and jump back in if the trend continues.
Fundamentally, fears that the recession will not quietly go away are creeping back into the minds of traders. Where will the new jobs come from? Who is going to buy into the growing inventory of homes? When will the credit markets unfreeze? Are we ever going back to "normal?" These are questions that probably no one knows the answer to right now, so until then I'm going with the current trend and that's long US Dollars for safety.
So, I am going long on this pair if it retraces down to the previous week high. My stop will be just a bit more than the daily range of 85 pips, and I will target recent resistance and beyond. Here's what I am going to do:
Long USDCAD 1.1450, stop at 1.1350, pt1 at 1.1550, pt2 at 1.1650
Remember to never risk more than 1% of a trading account on any single trade. Please adjust position sizes accordingly.
We do have a week full of US data to keep currencies moving this week, so don't forget to check out our economic calendar. Stay tuned and good luck!
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