Technical Analysis USDCAD 4 November 2014

by IFC Markets

Trade Balance

Today at 14:30 (CET) we expect the release of the American and Canadian Trade Balance. This indicator is the volume ratio of exports and imports. If the difference in volume is positive, then the trade balance is positive (surplus). A surplus (or a reduction in deficit) is a favorable factor for the national currency appreciation, and it has a significant impact on the market. A simultaneous data release by two trading partners suggests a consistent interpretation. For this reason we can expect a new volatility momentum of the USD/CAD currency pair.

Here we consider the USD/CAD on the H4 chart. 4th November 2014. The price breached the H4 bearish trend line in the direction of the green zone. New lows and highs are located above the previous ones, and that suggests the formation of a new bullish trend. After the Parabolic historical values crossed the H4 trend line, DonchianChannel reversed upwards, so this signal confirms the market sentiment. The only alarming signal comes from RSI-Bars oscillator: the last bar broke the bullish trend line downwards. The breakout can be confirmed as false only after the oscillator level crossing at 77.6035%. We expect it to happen at the same time or before the breakout of the price level at 1.13830. This mark can be used for opening a pending buy order.

Currently, the bullish candlestick pattern "absorption" is formed near that level (marked in yellow). It confirms the short-term bullish trend. Stop Loss is recommended to be placed below the fractal support level at 1.12557.

After position opening, Stop Loss is to be moved after the Parabolic values, near the next fractal low. Updating is enough to be done every day after a new Bill Williams fractal formation (5 candlesticks). Thus, we are changing the probable profit/loss ratio to the breakeven point.

Position Buy
Buy stop above 1.13830
Stop loss below 1.12557

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