Hello Traders,
The USD is charting up fuelled by yesterday’s better than expected Manufacturing ISM. While the USD has been on the back end of events for the better part of the year, investors are once again finding confidence now that the Feds are clear of their monetary path going forward.
As capital flow into the USD, the euro is bleeding now that consecutive political events are distorting and breaking bullish momentum. It should be noted that even though Catalonia secessionist push is “illegal” and ought to be dealt with internally, Sunday’s clashes turned the microscope to the government and how it plans to quash violence and initiate negotiations.
As a result, Spanish ten year bond yield rose reflecting temporary riskiness and should widen in-case of negative developments. The spread is even bigger in the 2 year bond and only out performed by Italian bonds who are troubled by financial institutions.
The Euro should also suffer now that the new grand coalition will necessitate the participation of CSU and FDP who are expected to oppose Germany’s push for inclusion and fostering relationships after Brexit. All these factors combine and bring uncertainty to the common currency already at record highs.
Technically, the USD is stepping on gas and as last week candlestick closed, a 4 month resistance trend line and the 200 period MA had been broken. All this happened with a buy signal whose %k and %d were diverging meaning bullish momentum was high. You will also note that this move up was after a bullish divergence had formed after week ending 30.07.2017 and 03.09.2017 lows. I will like to keep this simple and refer to the WEEKLY CHART ONLY.
I will look to enter long with stop loss below 1.24-((week ending 30.07.2017 lows)) and aim for the first resistance level at 1.28 followed by 1.30 as ideal for some cool 500 pips.
This will turn out as follows:
Buy: 1.252
Stop Loss: Below 1.24
Take Profit: 1.28 and 1.30
Have a good trading day guys.

usdcad weekly chart-03.10.2017

Source: Dalmas

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