The USD has been stronger
since last Friday following the US NFP report where the data surprised with solid jobs
and wage growth. There were also negatives like the uptick in the unemployment
rate, but all in all, we can say that it was a good report.

The data triggered a
hawkish repricing in interest rates expectations with the market now expecting
once again just one cut by the end of the year. It’s not a big deal in the
bigger picture, but for now the sentiment is bullish for the greenback and we will
likely need a catalyst to change it again.

The CAD, on the other hand, has been already a bit under pressure as the Bank of Canada delivered a slightly more dovish
cut than expected. Overall, the central bank said that they remain data
dependent and the rate cuts expectations didn’t change much.

If we go back into risk-on
sentiment, the greenback could start to lose ground against the major
currencies again, so the US CPI report today will be key as the recent breakout
could be invalidated in case we get soft data. On the other hand, if we get a
hot report, we should see the pair reach the 1.3861 level in the next weeks.

USDCAD
Technical Analysis – Daily Timeframe

On the daily chart, we can
see that USDCAD broke out of the recent range as it breached the 1.3740 resistance following the US NFP release. The
target for the buyers remains the 1.3860 level and we can expect them to pile
in around the recent resistance now turned support.

The sellers, on the other
hand, will want to see the price falling back below the 1.3740 zone to
invalidate the bullish bias and start looking for a drop back into the 1.36
support.

USDCAD Technical
Analysis – 4 hour Timeframe

On the 4 hour chart, we can
see more clearly the breakout and the support now around the 1.3740 level where
we can also find the 38.2% Fibonacci retracement level for confluence.

This is where we can expect
the buyers to step in with a defined risk below the support to position for a
rally into the 1.3860 level with a better risk to reward setup. The sellers, on
the other hand, will want to see the price breaking lower to position for a
drop back into the 1.36 support.

USDCAD Technical
Analysis – 1 hour Timeframe

On the 1 hour chart, we can
see that we have a trendline around the 1.3720 level which is
going to be the last line of defence for the buyers in case the price dips
below the support. The red lines define the average daily range for today but do note that the
price can extend beyond them when there are strong catalysts like today’s US
CPI report.

A hot report should give
the buyers even more conviction to increase the bullish bets into new highs,
while in-line or soft data will likely give the sellers more control.

Upcoming
Catalysts

Today we get the US CPI data and the FOMC rate decision. Tomorrow,
we have the US PPI and the latest US Jobless Claims figures. On Friday, we
conclude the week with the University of Michigan Consumer Sentiment survey.

This article was written by Giuseppe Dellamotta at www.forexlive.com.

• Prior -5.2%
• Market index 208.5 vs 180.4 prior
• Purchase index 143.7 vs 132.3 prior
• Refinance index 554.7 vs 432.1 prior
• 30-year mortgage rate 7.02% vs 7.07% prior

That’s quite a rebound in mortgage applications in the past week, owing much to a surge higher in refinancing activity. The latter is seen jumping up to its highest since September 2022. The data has been rather volatile in the last few weeks especially, so we’ll have to see how this plays into the overall trend in the months ahead.

This article was written by Justin Low at www.forexlive.com.

Based on the attached chart and the highlighted guidance, here’s a detailed trade idea for Russell:

Let’s break down the key elements of this trade setup:

• Retest:
  • The price action appears to be revisiting a previous support level (horizontal line) after a pullback. This retest suggests a potential buying opportunity if the price bounces back up. 🛠️
• Anchored VWAP:
  • The purple line on the chart indicates the Volume-Weighted Average Price (VWAP), acting as a dynamic support/resistance zone. A retest of this area, combined with the support level, strengthens the case for a long position. 📊

Trade setup details:

• Trade setup: Long position on Russell with a reward-to-risk ratio of 4.5:1.
• Entry point: Place a limit buy order at 2021.8 🛒
  • This entry point is just above the recent retest and the anchored VWAP, which serves as a confluence of support.
• Stop loss: Set a stop loss at 2011.5 🚫
  • This means risking 10.3 points on the trade, ensuring a manageable risk.
• Take profit: Aim for a target profit of 46.3 points, exiting at 2068.1 🎯
  • This target capitalizes on the potential upside with a favorable reward-to-risk ratio.

Partial profit strategy:

• Initial partial profit:
  • Consider taking partial profits (50-80% of the position) when the price reaches the target zone 📊.
  • This approach helps to lock in gains and reduce exposure.
• Adjust stop loss:
  • After taking partial profits, move the stop loss to the entry point (2021.8) to secure the remaining position 🔒.
  • This step ensures the trade remains risk-free for the remaining position.

Long-term position:

• Swing trade potential:
  • Hold the remaining position for a longer-term swing trade, riding the potential upward momentum 📈.
  • This strategy allows for additional gains if the bullish trend continues.

Technical consideration:

• Pattern analysis:
  • The trade is based on the descending wedge pattern visible in the chart, indicating a potential breakout 📉➡️📈.
  • The confluence of the retest and anchored VWAP adds to the trade’s validity.

Risk management:

• Proper position sizing:
  • Ensure proper risk management and position sizing to protect your capital 🔐.
  • Only risk a small percentage of your trading account on any single trade to manage potential losses.

Note: This trade idea is shared for informational purposes only and is at the trader’s discretion and own risk. Always perform your own analysis and consult with your financial advisor before making any trading decisions.

This article was written by Itai Levitan at www.forexlive.com.