It’s the last trading day of the week and while there haven’t been any smoking guns yet, investors are still digesting Mnuchin’s words. What it looks like is the new administration has been struck by reality and now their sweeping tax reforms agenda which Mnuchin says was their priority has faced headwinds. Reforms will be tabled and further discussions will be involved thereby delaying the process. In fact he went on during his first interview to say that any policy steps Trump takes will have a short term impact and that is what investors didn’t want to hear. FX traders in particular are facing it rough with the new developments has nothing is stable yet. A flurry of comments and statement is keeping everyone on limbo. Today, though we shall look at how the USDCAD is doing. Yesterday EIA report showed that oil stocks still remains and demand isn’t as expected despite OPEC trying everything they can to support oil prices.
At first glance, it appears that the Loonie is till benefiting from the post FOMC minutes meeting and everyone is minting. I would however like to highlight my concerns especially to the fact that the CAD failed to break below the 1.3 mark even with the apparent USD weakness.
My strategy is to go long today in the lower time frame and target 50-70 pips using a very tight stop loss in the 1HR chart. Momentum is picking up both in the 1HR and 4HR chart with stochastics already oversold. The OBV is increasing with buyers entering the fray and this looks like a good opportunity to buy even in the 30 or 15 min charts.
For once, notice the support trend line which has been broken in the 1HR chart. Entry should be made after closure of this candlestick and trading will be as follows.
Stop Loss: 1.3070
Take Profit: 1.3160 for a 1:2 risk reward ratio
Have a good trading day and a nice weekend.