#USDCAD has continued to trend lower after the Bank of Canada announcement to end QE.
This could see the central bank hike rates sooner than expected strengthening the currency. What next for USDCAD?
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The Bank of Canada has planned to end its QE program at the end of the month in a shock move. It was predicted that the BoC will be hawkish in their tone but the market did not expect this. This could see the BoC hike rates earlier than anticipated which could lead to a stronger Canadian dollar.
Looking at the USDCAD monthly chart we can see that the price looks to be in a strong downward trend and in an impulsive phase. If this trend continues we should expect to see lower highs and lower lows on the daily time frame which could lead to some short opportunities.
The Daily Chart
We can see from the chart above that the trend is making lower lows and lower highs in line with the monthly impulse phase. If the daily chart is now going to go into an impulsive phase we should see the lower time frame of the 4hr also forming a downward trend.
This can offer us short term trading ideas on the trend. The current USD weakness in the market could contribute to the price of the major forex pair falling towards the major swing lows.
The 4hr Time Frame
This trading time frame shows us that the price has broken through the previous 3 lows which highlights the opportunity for a swing trade if we could see a retest of the previous swing lows or a resistance zone a little higher.
The 1.2400 level could be an ideal level to look for short opportunities as a rejection here would show signs of a reversal head and shoulders pattern. Alternatively, we can look for a rejection of the lows for a continuation of the trend.
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