USDCAD Limit Buy entry at 1.4050 with a target of 1.4525 and SL of 1.3980
This is a 4-hour chart of the USDCAD pair. The fundamentals have been lagging the technicals with regard to this pair recently. With the Canadian GDP being heavily dependent on the oil market which equates to around 10% of the Cad$1.8 trillion Canadian income (pre Covid-19 outbreak). Therefore, any disruption in this sector will heavily affect the value of the Canadian dollar.
On the 30th of March, we saw WTI oil plummet in value, from last year’s high of over $65 per barrel to around $21 per barrel, because of the Covid virus pandemic. This sent the USDCAD pair to 1.4670, before falling to 1.3864. And where this recently became a double bottom on the 4-hour chart. Notably, the recent low at that exchange rate was when oil was 50% lower at only $11 per barrel, having crashed into negative territory at the end of April for the May future’s contract delivery.
We are now in a bull run, where we would expect a slight pullback at the beginning of the week and where we hope to go long on that pullback at 1.4050 and capture some momentum up to our target of 1.4525, based on our belief that oil prices will remain low and that the market will try and recapture the previous highs from March.