As we continue to digest Yellen’s comments, the USD continues to trend higher. It looks likely that there will be a rate hike but as people buy the rumor, big time investors are selling the fact. Fed Interest rate trackers are pricing a rate hike at 86% and this is why the USD is gaining against other currencies and testing the 115.00 resistance level in the USDJPY. It is interesting how the FED shifted its stance from the rhetoric it had from January minutes of meeting. The Fed said they were staying in the sideline until there is a clear indication of the direction the economy is taking. It has now changed and every governor is talking of immediate measures of tightening to prevent a bubble and stabilize the economy. As a matter of fact, the number of speculative USD bulls is on the rise and commands about 70% in the USDCAD. This means, there is a higher likelihood that the Loonie will continue to face the sword as the USD trend higher. To this end, the long term view is to go long and liquidate the CAD longs. At the moment though, different technicals considerations are in view and there is nothing much fundamental wise other than the Trade balance and the Ivey PMI. The Ivey PMI is expected to rise to 58.9 from the last record of 57.2.
To the charts and I look to scalp this trade. Already there is an oversold stochastics in the 30 min chart and a strong bear engulfing candlestick has formed. This means short term, intraday bears are in charge. There is also a sell signal which has printed with reducing volumes as shown by the OBV.
I will look to trade this as follows:
Stop Loss: 1.3430
Take Profit: 1.3355
Have a good trading day