Should We Ignore USDCAD Head & Shoulders?
Reasons for buying USDCAD:
- Disappointing Canadian employment data last Friday
- Price bounced off both the demand zone and support trend line
- Crude Oil Futures price rejected resistance trend line
Last Friday, Canadian employment posted a huge drop and unemployment increased by 0.2% to 5.7%, both missing estimates by a wide margin. Despite this, the CAD still managed to maintain some strength, supported by the rise in oil prices. But at this point of time, the chart is showing that maybe, the market has not fully priced in the weak data yet.
In the 4-hour USDCAD chart, we can see that the price plunged but bounced off the demand zone and support trend line after the US announced a delay to impose tariffs. Crude Oil Futures price also approached and rejected resistance trend line.
Although the announcement on tariffs is a positive news, tariffs are still set to be imposed and not totally removed. The trade war has been creating a lot of volatility in the market, so we should always keep a lookout for the latest developments and manage risks accordingly. The head and shoulders pattern may form and play out, but I don't trade solely on chart patterns, that is why in this case, I will go long on the USDCAD.
- Disappointing Canadian employment data last Friday
- Price bounced off both the demand zone and support trend line
- Crude Oil Futures price rejected resistance trend line
Last Friday, Canadian employment posted a huge drop and unemployment increased by 0.2% to 5.7%, both missing estimates by a wide margin. Despite this, the CAD still managed to maintain some strength, supported by the rise in oil prices. But at this point of time, the chart is showing that maybe, the market has not fully priced in the weak data yet.
In the 4-hour USDCAD chart, we can see that the price plunged but bounced off the demand zone and support trend line after the US announced a delay to impose tariffs. Crude Oil Futures price also approached and rejected resistance trend line.
Although the announcement on tariffs is a positive news, tariffs are still set to be imposed and not totally removed. The trade war has been creating a lot of volatility in the market, so we should always keep a lookout for the latest developments and manage risks accordingly. The head and shoulders pattern may form and play out, but I don't trade solely on chart patterns, that is why in this case, I will go long on the USDCAD.
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