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Today’s Trading Edge: USD/CAD – Falls on Three Drives to a Top Pattern and Canadian CPI

Posted by Edward Moya on Oct 16, 2014 11:13:00 PM

WWM USDCAD OCT 17 2014

The Canadian dollar continued to retrace from the 1.1384 high made on Wednesday after a report showed that inflation remained at the Bank of Canada’s 2.0% target.  Canada’s CPI did slowed down from the 2.1% pace set in August.  With deflation fears running wild across most of the advanced economies, today’s release supports the Bank’s bias that inflation will remain around the 2.0% level. 

Price action on the daily chart shown above highlights the relentless rally since July may have formed a three-drives-to-a-top pattern.  This reversal pattern could target a retracement towards the 1.12 handle.  It is around that area we could see price stabilize.  Eventually, we may see a move a consolidation towards 1.10, but the current rally may continue if we see oil prices below 78.00.  Key upside for USD/CAD will be the 1.15 handle

The trade: Sell USDCAD at 1.1245 with a stop loss at 1.1260 and a take profit at 1.1215.  The Risk/Reward Ratio is 1:2

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

Topics: Canadian dollar, Canada, USD, USDCAD, Cad, Canadian, Canada Economy

 

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