This is a very interesting situation because all of the technical signals and fundamental signals seem in place for a continuation of the downward trend in USD/CAD. I have played the pair a few times with mixed results. With the most recent U.S. Inventory report this week, and the upcoming summer driving season, the price may yet go higher. If the price continues to climb, USD/CAD could see fresh lows. However, I'm not positive that we will hit 75USD (as suggested by Saudi Oil Minister Naimi) as the demand for gasoline has yet to reach what it was a year ago as stated in the article, but already we are now just over $66 a barrel. On the technical side, the signal for selling USD/CAD was hit yesterday May 29th, when the daily price closed below the 50% retracement level from the last year and a half of the rising dollar. In my opinion, the next level of major resistance, should price continue downward, is the 1.06 region where prices tended to hover near and around for the last two summers, which might make for some decent sideways action for a little while. Nonetheless, I wouldn't be playing any long positions without very tight stops, and certainly not for any extended time until both the fundamentals and the technicals indicate otherwise. On the short side, I missed the move on friday while I was trading other pairs so I will be watching the action next week to spot a decent retracement back up to a decent selling level (say 1.100/1.1060, former support which would now be resistance), if the market provides such an opportunity, with the intention of seeing the 1.06 level or possibly lower.
No comments:
Post a Comment