Selling Rallies Short-term and Buying Dips favored in USDCAD (extract from Weekly Market Forecast 18th of May 2014)

The US dollar was seen trading lower against the Canadian dollar this past week. There is now a down-move trend line formed on the 4 hour chart. I think selling close to the highlighted trend line should be favored. If the pair bounces from the current level close to the trend line, stop and creates a divergence, then we can jump into a sell trade. Initial target should be around the last low and final target could be around the 1.0760 level. Stop should be placed above the 200 SMA on the 4 hour chart.

Alternatively, if the pair continues its fall, and does not trade higher, then we might also look to buy dips. There is a trend line and 200 SMA on the daily chart. If the pair falls closer to this support zone, then we can jump into a buy trade if bullish divergence forms on the lower timeframe.

Initial target should be around the 1.0920 level, and final target could be around the 1.1020 level. Stop should be placed below the 200-day SMA.

Major events scheduled in the upcoming week
The US dollar traded higher this past week, as the currencies like the Euro and British pound lost the ground. The economic releases in the US this past week were mostly on the positive side, whereas in the Euro zone and the UK it was on the mixed side. This overall caused a downside in the EURUSD and GBPUSD pairs. The EURUSD pair was one of the biggest losers this past week, which traded below the 1.3660 support level. Other pairs like USDJPY was also seen trading lower, as the Japanese yen gained some bids against the US dollar. There was nothing much to note from the economic side this past week.

Let us look at all major events lined up in the upcoming week.
Sunday – New Zealand PPI data.

Monday – Spanish trade balance and RBA monetary policy meeting minutes.

Tuesday – German PPI data, Italian industrial production data, UK CPI data, Japanese trade balance data, Australia’s Westpac consumer sentiment and BOJ interest rate decision.

Wednesday – Euro zone current account data, MPC meeting minutes, UK retail sales, Fed’s Yellen speech, FOMC meeting minutes, Chinese HSBC manufacturing PMI and New Zealand’s inflation expectations.

Thursday – German manufacturing and services PMI, French manufacturing and services PMI, Euro zone manufacturing and services PMI, UK GDP data Canadian retail sales, US initial jobless claims, US manufacturing PMI and US existing home sales data.

Friday –German GDP, German Ifo business climate index, Canadian CPI data and US new home sales data.

This analysis is taken from Weekly Market Forecast, which also includes trade opportunities on: EURUSD, GBPUSD, EURGBP, USDJPY, EURJPY, GBPJPY, AUDUSD, NZDUSD, EURCAD, GOLD, OIL and INDICES.
Get it HERE: Vladimir’s Markets Forecast

Happy trading friends!

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