Risk Reward Ratio :- 2.25:1
The Canadian dollar is a commodity linked currency with the commodity being Oil you can see from the recent news why I am interested in this currency pair. With the price of Oil being supported by tensions in Iran it is only natural to see the Canadian dollar strengthen which it did last week. Friday saw good figures for Canadian employment change and unemployment dropped from 5.9% to 5.7%. On the other side of the equation the USD had a fairly weak Non Farm Parole figure and the ISM also showed a slip in expansion which weakened the USD across all the major currencies. Although the are expected to increase their interest rates again in March we have to question whether or not USD tightening is already priced into the market. I expect to see further USD weakness and Canadian dollar strength over the coming months. Keep an eye on the USD CPI figures On Friday afternoon next week as I expect them to also show weaker consumer spending.
Technical Analysis:- A lot of the downside in this currency pair may well have been caused by the Iranian problems so I am taking into account a correction before investors start to sell again. There is a good area of confluence around to 50% Fibonacci pullback 12650 which also coincides with previous support on the consolidation at around the same price so this is going to be my entry for a sell. My stop is going to be above the level of consolidation 12970 with a target at the previous low back in September 2017.
Entry price:- 12650
Stop loss :- 12970
Take Profit:- 12000