Canadian Greenback, CAD, USD/CAD, Loonie Value EvaluationAfter an outsized rush of volatility within the first two-and-a-half mon
Canadian Greenback, CAD, USD/CAD, Loonie Value Evaluation
- After an outsized rush of volatility within the first two-and-a-half months of the 12 months, USD/CAD value motion has calmed right into a range-bound backdrop.
- Whereas imply reversion has been the theme over the previous few weeks, that won’t final for lengthy as Friday’s financial calendar brings employment studies out of each the USA and Canada – producing the potential for heavy volatility in USD/CAD.
USD/CAD: From Resistance to Assist and Again
As checked out final week, USD/CAD was holding resistance across the psychological stage of 1.4000 on the chart, and this has beforehand been a giant stage within the pair as there’s been however a few months wherein the pair has traded above this stage over the previous 15 years. Notably, this stage got here into play in January of 2016 after a bullish development that was virtually 5 years and 5,000 pips within the making ran right into a brick wall of resistance. January of 2016 produced an inverted hammer on the month-to-month chart; and February noticed follow-through as sellers continued to push – and for nearly 4 full years value motion in USD/CAD remained subdued under the 1.4000 stage. Till March of 2020, that’s.
USD/CAD Month-to-month Value Chart
Chart ready by James Stanley; USDCAD on Tradingview
The month of March introduced a flurry of themes to the fray, key of which was concern emanating from near-global shutdowns in response to the unfold of the novel coronavirus. This amounted to a robust topside push within the US Greenback as capital flows sought out safer harbors, and US Greenback value motion jumped by as a lot as 8.8% from the March lows as much as the March highs – within the span of about ten days because the world ducked for canopy.
| Change in | Longs | Shorts | OI |
| Daily | 1% | 13% | 8% |
| Weekly | 11% | 15% | 14% |
In USD/CAD – that transfer within the Buck was exacerbated by CAD weak spot, with the USD/CAD pair rising by as a lot as 10.2% within the month of March – and leaping above the 1.4000 stage within the course of. The psychological massive determine couldn’t deter bulls on the time as value motion ran all the way in which as much as a recent four-year-high on the 1.4668 stage, with consumers shying away from the 17-year-high that lurks simply 21 pips above that value.
Since then, nonetheless, consumers have been unable to re-gain management and after a pullback noticed costs claw again a piece of that prior achieve within the first-half of April, value motion has moved right into a extra range-bound state.
USD/CAD 4-Hour Value Chart
Chart ready by James Stanley; USDCAD on Tradingview
At this level, value motion is discovering resistance at a well-recognized stage round 1.4150, as that is close to the 38.2% retracement of that main transfer from March and the identical stage that helped to carry resistance earlier this week. This Fibonacci stage can also be associated to the 1.3992 stage that I had checked out final week, which is the 50% marker of that very same main transfer and had beforehand helped to set some confluent resistance forward of one other help take a look at final week.
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That prior resistance zone, comprising roughly 20 pips across the 1.4000 massive determine has now been re-purposed as help, serving to to cauterize yesterday’s lows forward of as we speak’s reversion to resistance.
USD/CAD Two-Hour Value Chart
Chart ready by James Stanley; USDCAD on Tradingview
With a heavy batch of headline danger on the playing cards for Friday of this week, developments is usually a tough backdrop to research as a few very key drivers will quickly be priced into the equation. The degrees close by value motion, nonetheless, could possibly be used to assist substantiate technique on the pair; and Fibonacci retracements round each the 2020 main transfer and the March main transfer have appeared to supply some attention-grabbing ranges to work with of current.
Above present value motion is the April excessive, displaying across the 23.6% retracement of the 2020 main transfer on the 1.4261 stage; and above that’s the 23.6% retracement of the March main transfer which had beforehand helped to set resistance on the ultimate buying and selling day of March.
On the help facet of the matter – the confluent zone across the 1.4000 massive determine looms giant and has been fairly busy of current, serving to to set resistance final week adopted by help this week; and under that’s the 1.3850 stage which has helped to extinguish two separate bearish runs within the month of April.
USD/CAD 4-Hour Value Chart
Chart ready by James Stanley; USDCAD on Tradingview
— Written by James Stanley, Strategist for DailyFX.com
Contact and comply with James on Twitter: @JStanleyFX