The start of the short trading week for North America has been rather predictable so far as investors begin looking forward to the Thanksgiving holiday here in the US. Volatility has been reserved in the US equity markets, and currency markets are doing their best to remain relatively quiet as well. Traditionally, this is a very low key week with current trends typically continuing (or slight pullbacks within those trends) before we begin to hear stories about how strong or weak Black Friday shopping was for our favorite retailers. For that reason, I’m taking a look at the USD/CAD which has been enjoying a sustained trend on a couple of fronts.
Extreme volatility is something that is quite rare in the USD/CAD. There have been many days where the currency pair fails to move the needle of interest for traders, and it is just that kind of mashed potatoes without gravy blandness I’m looking to exploit. While the trend down has been strong for the month of November, it is getting to a pullback level that could provide resistance.
While no tradable instrument is completely predictable all the time, there is a triangle pattern in the USD/CAD that looks like it needs to cook a little more before being served. If we were to liken it to a turkey, you could say there’s more room for stuffing toward the end of it, and a couple more days of subdued price action could fill the void.
In addition to the trendline/triangle resistance, there is a Fibonacci retracement that corroborates the story of resistance either at 1.13, or slightly above at 1.1330. As for support, the bottom part of the triangle lies slightly above 1.12 where this pair could then stage either a rally or descent based on which side of the triangle it breaks out. A little bit of USD weakness this week, which was also spelled out by my colleague Matt Weller in his EUR/USD article this morning, could be something that pans to set this up as US investors prepare for their food comas on Thursday.
Figure 1:
_20141124201240.png "USD/CAD")
Source: www.forex.com
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