Today we will be watching closely USDCAD as I think the pair might present us an excellent buy opportunity. We have a very beautiful up-move trend line as plotted on the daily chart shown below. The pair is also creating a bullish hidden divergence on the daily chart, which encourages our bullish view.
Looking at the 4 hour chart of USDCAD, we have two critical range supports at around 1.0360 and 1.0345, which are also close to the trend line. RSI is also closing in towards the extreme levels as shown in the chart below. We want the pair to drop closer to any of these supports in order to enter a buy trade. When the pair makes a stop at any of these levels and form a bullish candle pattern on the 1 hour chart along with the bullish divergence, then we will jump into the trade.
Initial target can be near the descending trend line as shown on the 4 hour chart below, and final target could be the next major resistance of 1.0480/1.0500. Stop should be placed below the daily trend line and support.
Reviewing Friday’s events and trades
Last week was an important one as the Nonfarm payroll numbers surprised the market with a measure of 169K missing the expectations of 180K, and there was a revision for July data as well to the downside. Unemployment rate fell to 7.3% due to decline in the participation rate. Overall data was not good and proved that US labor market is still far from improving, which overall was USD negative. Now all the incoming data from the US would hold the key as the September FOMC meeting approaches.
Fundamental Outlook for the day
Earlier in the Asian session, Chinese inflation data was measured better than expected, which is helping risk early in the week. Today, there is no major fundamental event scheduled from the US. Some low risk events include CB employment trends index and consumer credit data. I expect mostly range trading in the day, and further consolidation before any significant move later in the week.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBPUSD, EURGBP and GBPCHF.
Get it HERE: Vladimir’s Markets Forecast
I wish everyone a green week ahead. Happy trading!
