USD/CAD: Plenty of Punch and Choppy Results Testing Traders – 09 August 2022
The USD/CAD has packed plenty of price action in the past few days of trading and volatility is likely to continue as ‘fair’ equilibrium is sought.
As of this writing the USD/CAD currency pair is near the 1.285750 mark. On the 4th of August the USD/CAD was trading near lows of 1.28200, coming within sight of support seen in the last week of July and but not coming anywhere near the low on the 1st of August which touched 1.27675. On the 5th of August the USD/CAD soared to nearly 1.29880, but then reversed lower before going into the weekend.
Monday’s move towards Lows may Raise Eyebrows of USD/CAD Speculators
Intriguingly yesterday’s trading in the USD/CAD also produced another selloff and the currency pair actually consolidated between 1.28480 and 1.28650 for a lot of the day. This morning’s trading has seen the USD/CAD essentially sustain these lower marks, which were last traded in a sincere way on the 4th of August. The spike upwards on Friday via buying in the USD/CAD happened after the Average Hourly Earnings data showed an uptick in payroll spending, per my interpretation of Forex.
Volatility continues to be a minefield in the USD/CAD for day traders, and risk management certainly is needed.The USD/CAD is testing lows seen on the 4th of August, which may entice speculators who believe the currency pair is momentarily oversold.
The notion that the USD/CAD spiked higher on strong buying Friday, and then reversed lower may be seen as a pure technical move proving the Forex pair was overbought. However, some speculators may look at the current value of the USD/CAD as it traverses important support and suspect the currency pair may actually now be oversold. Choppy conditions are likely to be demonstrated in the coming days.
If the USD/CAD starts to trade within a Narrow Range this may Prove Attractive
Traders who are cautious may want to see if current support levels can hold. If the USD/CAD can stay within the 1.28570 to 1.28600 zone for a time, this may prove to be a rather interesting ignition point to launch trades. However, day traders should probably look for quick hitting trades that are not overly ambitious. The use of conservative leverage and a slightly wider stop loss, compared to a relatively close take profit target may prove to be worthwhile.
Consolidation may prove to be favorable in the near term as financial houses interpret the tea leafs from the U.S Federal Reserve. Traders looking to take advantage of support levels may want to place buying positions near support around the 1.28565 to 1.28550 vicinity to look for upside momentum.
Canadian Dollar Short-Term Outlook
Current Resistance: 1.28650
Current Support: 1.28555
High Target: 1.28970
Low Target: 1.28212
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