Thursday, March 31, 2011

Guest Commentary: Upcoming Week for the USD/CAD – March 27 2011

Upcoming Week for the USD/CAD – March 27 2011

Places to put limit orders this week

Buying USD:

0.9800, 0.9780, 0.9750 (aggressive), 0.9720 (aggressive)

Selling USD:

0.9815, 0.9830-40, 0.9910, 0.9940 (aggressive)


The tabling and vote of non-confidence by the opposition in the
Canadian government spurred a late day rally on Friday, erasing losses
from Thursday. Last week the rate was contained within a range - a low
of 0.9730 (support) and a high of 0.9844.

The longer-term price trend continues to point lower, but indicators
such as the MACD are showing a bullish divergence. As the USD has made
lower lows versus the CAD the MACD has been making higher lows,
showing a lack of momentum and conviction in the downward moves.

A rally above the 0.9973 would be an indication of a turning point in
the pair, but a daily close above 1.00 would tell the real tale. The
last close we had above parity was on January 28 where the pair closed
at 1.0011 only to fall over the next two sessions.

Figure 1. USD/CAD Daily Chart


The MACD on the hourly chart did not confirm the drop to 0.9730 last
week, and is signalling momentum in the USD. A rally above 0.9840 is
likely to see continued buying into the higher resistance levels (see
Selling USD levels).

The pair continues to trade in a choppy fashion, with momentum failing
to be sustained in either direction. This should be remembered when
placing trades, as currently this is not a strongly trending pair.

Volatility has broken out and reversed course on the legs of the
earthquake in Japan. The daily average (14) range which reached a
miniscule 52 pips/day on March 13, has since climbed to 90 pips/day.
The breakout in volatility, if it can be sustained, is likely to push
the pair beyond the range it has been contained in. Indicators such as
the MACD indicate the breakout will be to upside.

High impact news this week:

USD Consumer confidence:Tuesday@ 10 AM EST

CAD Gross Domestic Product:Thursday@ 8:30 AM EST

USD Non-Farm Payrolls & Unemployment:Friday@ 8:30 AM EST

USD ISM Manufacturing:Friday@ 10 AM EST

Have a great trading day!

Written by Cory Mitchell, CMT

Cory Mitchell is an independent trader specializing in short- to
medium-term technical strategies. He is the founder
of, a website dedicated to free trader
education and discussion. After graduating with a business degree,
Mitchell has spent the last six years trading multiple markets and
educating traders. He has been widely published and is a member of the
Canadian Society of Technical Analysts and the Market Technicians


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