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Today’s Trading Edge: USDCAD – Can’t Stop Making New Highs

Posted by Edward Moya on Jan 21, 2014 8:36:00 AM

WWM USDCAD JAN 21 2014

Traders can’t stop shorting the loonie as the U.S. economy improves while Canadian statistics continue to weaken.  With a more accommodative Bank of Canada, the loonie may weaken towards the 1.1200 area now that the 1.10 barrier was taken out last night. 

Price action on the weekly chart highlights a new 4-year high on USD/CAD.  This recent round of unrelenting strength is likely to continue as taper size and speed expectations grow for the Federal Reserve.  Higher highs however may only target point D of the potential bearish Gartley pattern, which currently resides at the 1.1230 level.  A strong confluence of resistance may also come from the 50.0% Fibonacci retracement of the noted March 2009 peak of 1.30 to the July 2011 low of .9405.   

The trade: Buy USDCAD at 1.1000 with a stop loss at 1.0950 and a take profit at 1.1190.  The Risk/Reward Ratio is just under 1:4

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

 

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