Awaiting GDP data in Canada
The Q2 GDP data will come out in Canada on Wednesday. The data are expected to be negative. Will the Canadian dollar continue weakening? It will look as growth on its chart.
The Canadian GDP will fall in Q2 2016 by 1.5% YoY after its rise by 2.4% in Q1, according to forecasts. If the investor expectations come true, this will be the record fall of Canadian economy since Q2 2009. The negative trend was caused by wildfires in Alberta province which hindered oil exports. The additional negative for USDCAD may come from the Fed plans to raise rates this year. This supports the US currency. The base rate is currently 0.5% in Canada. The chances for the rate hike are just 26% now.
USDCAD
On the daily chart USDCAD is struggling for getting back into the rising channel. To do that, it has to break through the previous support which has become the resistance line now. The negative GDP data may weaken the Canadian currency.
MACD has formed a signal to buy.
Parabolic has also formed a signal to buy which can be used as additional level of support.
Bollinger bands have widened a bit which means moderate volatility.
RSI oscillator has surpassed the level of 50 but has not yet reached the overbought zone, no divergence.
The bullish momentum may develop in case the USDCAD returns to the previous rising trend and breaks through its support to the up at 1.314. This level may serve the point of entry. The initial stop-loss may be placed below the Parabolic signal, the Bollinger band and the last fractal low at 1.272. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 1.314 without reaching the order at 1.272, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Summary of technical analysis
Position Buy
Buy stop above 1.314
Stop loss below 1.272
This overview has an informative character and is not financial advice or a recommendation. IFCMarkets. Corp. under any circumstances is not liable for any action taken by someone else after reading this article.
Recommended Content
Editors’ Picks
EUR/USD rises toward 1.0700 after Germany PMI data
EUR/USD gains traction and rises toward 1.0700 in the early European session on Monday. HCOB Composite PMI in Germany improved to 50.5 in April from 47.7 in March, providing a boost to the Euro. Focus shifts Eurozone and US PMI readings.
GBP/USD eases below 1.2350, UK PMIs eyed
GBP/USD is dropping below 1.2350 in the European session, as the US Dollar sees fresh buying interest on tepid risk sentiment. The further downside in the pair could remain capped, as traders await the UK PMI reports for fresh trading impetus.
Gold price flirts with $2,300 amid receding safe-haven demand, reduced Fed rate cut bets
Gold price (XAU/USD) remains under heavy selling pressure for the second straight day on Tuesday and languishes near its lowest level in over two weeks, around the $2,300 mark heading into the European session.
PENDLE price soars 10% after Arthur Hayes’ optimism on Pendle derivative exchange
Pendle is among the top performers in the cryptocurrency market today, posting double-digit gains. Its peers in the altcoin space are not as forthcoming even as the market enjoys bullish sentiment inspired by Bitcoin price.
Focus on April PMIs today
In the euro area, focus today will be on the euro area PMIs for April. The previous months' PMIs have shown a return of the two-speed economy with the service sector in expansionary territory and manufacturing sector stuck in contraction.