The U.S. Dollar experienced some significant moves last week with the help of a few key economic figures releases and North Korea’s threat on Guam.
Summary of Events:
- U.S. CPI and Core CPI changed 0.1% less than the 0.2% expected signalling a slower than expected inflation growth
- U.S. unemployment claims ticked up slightly to 244K from the estimated 240K
- Swiss franc and Japanese yen experienced gains as geopolitical tensions mount between North Korea and the United States
Starting with the weekly time-frame, this pair shows no sign of stopping after breaking out of the key daily level that we’ve been monitoring most of last month. Over on the daily time-frame, I have a better illustration for a potential entry.
The opportunity to enter would’ve be better last Thursday at the close of that second small bullish bar close. Given that this pair is in a strong uptrend, this pause marked a good swing trade entry point to ride this pair all the way up to the weekly level. If this pair gaps down on Sunday’s open and manages to hold above the 1.1736~ level, I would consider this as another entry opportunity.
I probably won’t even end up taking this trade at all, but I think this one is a worthy monitor. Over on the daily time-frame, we can see that there is an uptrend since the end of June. I marked the relative highs and lows and you can even see price making higher highs and higher lows…that is until now. The current low is, in relation, about equal to the previous low. If this pair failed to make a new higher high or even takes a much longer time than usual, we should consider taking a bearish stance.
For now, it’s quite early to tell. Given by how the three daily candles are seen side by side, this pair has been in a range with the lack of any economic releases. Next week just be very volatile for this pair as the inflation and retail sales figures are due.
Over on the weekly time-frame, USDCAD broke through a major trendline back in mid-April. Selling pressure has diminished drastically as price hit the weekly 1.2451~ level three weeks ago. For the past two weeks, this pair made a 300~ pips gain.
The daily timeframe is a bit more interesting in two senses. Friday’s strong bearish bar could signal the end of that bull run and further selling is expected for the weeks ahead. This is a bit too early to tell given that traders could be just closing out their long positions before the markets close leading to that bearish bar.
The second point of interest is the Fibonacci retracement off the 23.6 level. This fits that level perfectly. I would’ve expected price to go higher to the 1.30~ price level, but for now this is the first indication I should monitor this pair much closely for the weeks ahead to prepare for a short entry.
I still remain bullish on this pair given the strength of the Euro. However, the buying pressure of the Yen may still dominate depending on whether geopolitical tensions escalate or not. Another issue to keep in mind is that last week’s bearish move returned gains for the three weeks prior. For the time being, I don’t plan on making any trades on this pair unless there’s clear indication that either of these two levels hold up.
This is another long entry opportunity if price remains supported above the 1.497~ level or even the closer 1.50~ whole level. Price has finally broken out of the range as indicated of breaking above the high of the overlapping bars. Friday’s bearish candle is also another confirmation that price is being held supported even though it did trade lower. This is definitely a trade I would consider entering on market open.
I definitely wouldn’t say this is anything solid at the moment. I probably won’t even end up trading this at all. However, this is a first indication that we could be seeing a bullish rally. From the previous beginning of August lows, it made a higher high and then now what appears to be a higher low. Another indication is that price is attempting to cross our 20-period exponential moving average (EMA) signalling a potential short-term trend change. Given the unpredictable nature of this pair, I wouldn’t make any longer term trades.
As much as I wanted to trade the sell-off back at the resistance level, I held off on that. This pair remains in a wedge and will potentially continue to consolidate until whenever deemed necessary for a massive break-out. For the time being, the sell-off movement did not appeal to me given that it’s becoming weaker and weaker than the few times before that. For now, this is another pair I would closely be monitoring.