By IFCMarkets

Weak Canadian economic data bullish for USDCAD

Unemployment in Canada rose in August while the building activity slowed. Will the USDCAD rising continue?

The Bank of Canada kept its interest rate steady at 1.5% last Wednesday. Economic data released after that were weak: building permits fell in July when an increase was expected, and unemployment rose to 6% in August from 5.8% as labor force participation rate slipped to 65.3% from 65.4%. Weak Canadian economic data are bullish for USDCAD.

On the daily timeframe USDCAD: D1 had been trading with negative bias after hitting twelve-month high in the end of June. The price has returned above the 50-day moving average MA(50) and has breached above the resistance line.

• The Parabolic indicator has formed a buy signal.
• The Donchian channel indicates no trend yet : it is flat.
• The MACD indicator is above the signal line with the gap widening. This is a bullish signal.
• The stochastic oscillator is falling but has not reached the oversold zone.

We believe the bullish momentum will continue after the price breaches above the upper Donchian boundary at 1.3225. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below the lower Donchian channel at 1.2886. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop-loss level (1.2886) without reaching the order (1.3225) we recommend cancelling the order: the market sustains internal changes which were not taken into account.

Technical Analysis Summary

Market Analysis provided by IFCMarkets