Trading opportunities for currency pair: the USD/CAD rate has returned to the 1.3370 resistance. A strengthening of the rate to 1.3456 is expected before the FOMC convenes with the rate carrying on afterwards to 1.3577. Any growth will cease after a break in the trend line from the 1.2831 minimum.

Background

The last idea I made on the USD/CAD currency pair came out on 22nd June. The rate at the moment the review was published stood at 1.2269. After a pinbar was formed, the expectations were for the USD to strengthen to the trend line at 1.2472 and then after the line was broken I thought that we’d see the rate hit 1.2666 (from 1st June idea). The last target was reached on 7th July (Total: +397 points).

Current situation

From 29th September’s 1.3456 maximum, the USD has dropped to 1.2831. Since price movements for the Canadian depend on the price of oil, the rate could hit 1.3370 due to falling oil prices; Brent is down from $50.00 to $43.16.

An increase in US oil reserves and extraction is holding oil price growth back. The dollar is strengthening due to expectations that the US Fed will put up rates at their December meeting, whilst the market believes the ECB will instead lower their rate for deposits and widen the volume of their QE program.

What’s of interest at the moment?

On Friday the USD/CAD closed up around the 1.3370 resistance. The correlation between Brent and the USD/CAD is -0.86 and -0.76 with the dollar index. This means that as oil cheapens so does the Canadian.

The market on Monday often moves against that of Friday. Everything should become clear at the end of Monday. Due to technical factors, I see only one way: growth to 1.3456 and then to 1.3577. Any chance of such growth will become annulled if there is a break in the trend line from the 1.2831 minimum.