Seasonally through the month of October we usually see the Canadian Dollar underperform. Could this offer us long opportunities on USDCAD?
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Now that we are approaching the end of the month we like to take a look at the seasonal heatmap to see if any currencies or commodities stand out in terms of strength or weakness. The Canadian Dollar is one of the currencies that underperforms considerably through the month of October which could offer us some opportunities to trade it against stronger currencies.
Seasonally, the USD performs well through the end of the year and start of the next year, this could be a currency to trade against CAD. We have also seen a hawkish tone from the Federal Reserve recently which could add fuel to the USD bullish run.
USDCAD To Break Above 1.2900
Looking at the daily chart we can see that the price had tested the major resistance zone between 1.2900 and 1.2825 multiple times recently. This could see the resistance level lose strength and become less important as the price heads towards it which could lead to breakout of the major swing level at 1.2900. This is similar to the GBPUSD and GBPJPY analysis that we covered recently.
We can see that the rejections of the zone have become less impulsive and the price continues to form higher lows after rejecting. This shows us that the sellers are losing momentum here.
The 4hr time frame is now making a higher high and higher low pattern in line with our bullish bias which can lead to a long opportunity. If the price retraces back to the recent breakout highs on the 4hr time frame around 1.2700 we can look for bullish price action to go long.
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