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USDCAD: Keep an Eye on This Range Following Friday’s NFP

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Important: I use New York close charts. Click Here to Use My Preferred Broker

The USDCAD is a perfect example of why using New York close charts is so important. Although the December 4th and 5th sessions slipped below range support at 1.2670, buyers stepped in to close the pair back above the level before 5 pm EST.

We looked at this range over the weekend. In that commentary, I pointed out how a close above the range top or below the bottom would trigger a breakout opportunity.

At the time I was favoring a break lower given the velocity of Friday’s selloff. The fact that sellers didn’t even hesitate before the weekend didn’t leave much room for a bullish conviction.

It now seems that the USDCAD could go either way given Wednesday’s 96 pip gain that puts the pair right in the middle of this 240 pip range.

I was on the verge of mentioning Tuesday’s bullish rejection candle but decided to hold off and post about the USDCHF instead. In hindsight, I probably should have written the commentary, but the upper wick was a bit too long for my liking.

Both options (USDCHF or USDCAD) have worked out nicely thus far. As for the USDCAD, we now need a break from the current range. That is unless you decided to trade Tuesday’s long-tailed bullish rejection candle that formed at 1.2670 support.

For those of us still on the sideline, it’s going to take a daily close (5 pm EST) above 1.2910 to spring buyers free. The next key resistance above that comes in at 1.3160, giving traders 250 pips to work with.

Alternatively, a daily close below 1.2670 would expose the next key support at 1.2420. That said, given the recent break above descending channel resistance on the U.S. Dollar Index (DXY), I have to favor the upside here.

Keep in mind that this Friday is non-farm payroll at 8:30 am EST. You may want to avoid the USD during this time given the increase in volatility that’s sure to follow. That isn’t an issue, though, given that we need a daily close to confirm the range break.

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USDCAD range on daily time frame

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10 comments
Highlander says

Nice piece Bennet, please keep it up.

Reply
    Justin Bennett says

    Thanks. Will do.

    Reply
andrea says

Hi Justin
your teaching is pure class. The biggest lesson I have learned from you is this one: do what looks easier to you and avoid the difficult ways. That said I have 2 questions about this couple that I too am following. The big bearish candle from friday 1 dec was due to the excellent datas for the Canadian dollar. In the contrary yesterday rally from the Us dollar was due to the positive american datas. How much are datas a factor and how much is price action to decide whether it goes up or down of this channel?
Second question: is the Us index so important to take in consideration?
thank you

Reply
    Justin Bennett says

    I don’t pay attention to the data that comes out and whether it’s ‘good’ or ‘bad’. The only thing that matters to me is the price action on the chart.

    Not necessarily, but it can help in some situations.

    Reply
Sam says

Hi Justin;

Thank you for the post.

Please can you share the reason/reasons for staying on the sideline during major events.

To me it looks like these major events are the catalyst to the direction of the pairs.

Thanking you in advance.

Reply
    Justin Bennett says

    I stay on the sideline during high-impact events because of the uncertainty and volatility. Even if the market moves in your intended direction, you’ll likely get stopped out before you can realize any profit.

    Reply
tolu says

nice commentary, i went long at the rejection candle with tp at the top of the range, though thinking of putting trailing stop now

Reply
    Justin Bennett says

    Nice trade. Cheers.

    Reply
Tijani says

when it met requirement by closing above 2670 on daily, I took buy on a small pull back during EUROPEAN session before the big move because 200 pips is massive to me.Justinnnnnn….. THUMPS UP.

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