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Today’s Trading Edge: Loonie falls after Retail Sales suffers largest decline since April 2010.

Posted by Edward Moya on Feb 20, 2015 9:48:00 AM

WWM USDCAD FEB 20 2015

The Canadian dollar fell against the U.S. dollar after Statistics Canada reported that Canadian Retail Sales dropped 2.0% to $42.1 billion in December.  Weakness occurred in 9 of 11 subsectors and were down in every province.                

Price action on the 60-minute USDCAD chart shows the initial surge that occurred from the sales report.  Price rallied from 1.2469 to 1.2537 before settling around 1.2542.  Currently the pair is in the middle of a three day rally but still may be forming a descending triangle pattern if the 1.2590 region is respected. 

If we do see both a US dollar pullback and higher oil prices next week, we could see USD/CAD slide towards 1.2281, which is the 23.6% Fibonacci retracement of the 1.0619 low to 1.2794 high move.  A deeper retracement may find support from the 1.1963 level. 

If we do see the descending triangle invalidated, 1.2800 remains critical resistance.      

The trade: Sell USD/CAD at 1.2525 with a stop loss at 1.2625 and a take profit at 1.2225.  The Risk/Reward Ratio is around 1: 3

Edward J. Moya

Technical Strategist

WorldWideMarkets Online Trading

Topics: Canadian dollar, Canada, cable, US Dollar, USDCAD, Cad, Canadian, Canada Economy

 

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