The USD/CAD is trading near 1.36000 as of this writing with rather a fast price action being demonstrated. Traders who insist on participating in the holiday markets need to understand that Forex can produce swift changes of direction with seemingly little reason, and the USD/CAD is not immune to this factor.
Yesterday’s USD/CAD Lows Retested Tuesday’s Marks but then Reversed Violently
After touching a low of nearly 1.34850 yesterday and coming within sight of lows produced the day before, the USD/CAD suddenly rocketed higher. Speculators who did not have proper risk management in place were likely hurt by the climb which hit the 1.36110 level approximately. The rapid change in direction developed quickly and unfortunately can be blamed on a lack of strong volume.
After hitting yesterday’s highs the USD/CAD has traded incrementally lower and is now hovering near the 1.36000 vicinities, but traders need to remain alert. The USD/CAD climbed towards important highs and then relented, but the power of the move was enough to remind everyone that trading during the holiday season can be dangerous. Perhaps yesterday’s highs can be seen as a rather solid resistance level and a reason to wager on downside price action, but there are no sure things.
Before Climbing Higher Yesterday the Retest of Lows was Intriguing
- The 1.34500 level was broken lower again yesterday for the second day in a row. While the inability to build on the lower momentum should be a warning sign, it may also prove to be rather attractive.
- As the holiday season firmly holds Forex the USD/CAD remains speculatively of interest. The USD/CAD remains within the upper realms of its price range when a six-month chart is examined.
Yesterday’s retest of lows may feel like it is a place where the USD/CAD should be trading, but a true equilibrium is not easy to find during the holiday season. Trading volumes are thin and large orders can spark volatility without any warning. Solid risk management is needed. While upside price action above the 1.36000 level looks like it should be limited, this may prove to be false. Speculators should use narrow take profit targets to cash out of winning trades before they vanish.
Using support and resistance as places to ignite trades seeking reversals may seem wise, but traders should remain cautious. Holiday trading conditions will remain durable until the New Year’s celebrations are finished, until then the USD/CAD will challenge the best of traders.
Canadian Dollar Short-Term Outlook:
Current Resistance: 1.36145
Current Support: 1.35900
High Target: 1.36350
Low Target: 1.36185
Ready to trade our daily Forex forecast? Here’s a list of some regulated forex brokers in Canada to check out.