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Daily Forex Trading Strategy: The Loonie Runs out of Steam

USD/CAD (1.10758)

Short term resistance levels : 1.110, 1.201

Short term support levels: 1.10680, 1.0850

USDCAD_15Sept_MT4
USD/CAD Daily Chart

Most market indicators indicate a continuing negative trend downwards on the strength of the Canadian dollar.  There are however some conflicts that indicate a cap with this trend. These indicators are pointing to a flattening trend before a recovery period.

Here is a summary of the outlook.

  1. Investors should listen for the Tuesday speech from the Bank of Canada Governor Stephen Poloz.  The last speech indicated no change in interest rates but we will need to be on the outlook for any movement of this policy.
  1. Holiday spending might be too early to forecast but Labor Day spending, if any indication, should push more strength to the Canadian dollar.
  1. Historical trends in the Canadian Dollar for the last months of the Calendar year are traditionally in a positive recovery from any losses in the year.

Most daily indicators show a continuing negative trend downwards. There is a  tendency to project bullish forecast on USD/CAD but we are showing on the charts a tendency to stabilize.  Right now, we are hitting the key technical resistance near 1.110 and losing steam. Eyes are now on the support at 1.1068.

Traders should show some caution as we are likely to enter a consolidation period before another move higher.

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