Yesterday, the post was on how the USDCAD bounced off the 200 hour MA (green line in the chart above), moved above the 100 hour MA (blue line), and was up testing a swing area at 1.3434 to 1.3448 area which was ahead of better resistance at the 50% midpoint of the 2023 trading range up at 1.34739. The high from last week and on Monday and Tuesday, stalled near that key 50% midpoint level.
Less than 24 hours later, the price today has moved back down to re-test the 200 hour MA, and for the 2nd consecutive day, the price bounced off the level.
For today, the 100 hour MA (blue line) is a higher hurdle to get through and the bounce has taken the price back toward that level at 1.3415. The high just reached 1.34123 just a few pips shy of that MA.
A ping pong between the 200 hour MA below and the 100 hour MA above is underway.
Can sellers lean against the 100 hour MA now?
Sure.
For traders liking the CAD or not liking the USD, the 100 hour MA is a risk defining level that traders can lean against. Stay below, and all is ok. Move above and get out especially if the 38.2% is broken at 1.3423 as well.
For USDCAD buyers, you want to see a re-break of the 100 hour MA to confirm the bounce off the 200 hour MA. Getting back above the 38.2% is another hurdle to get to and through.
The ups and downs in the USDCAD pair not only over the last few days, but going back to early January, dictates that traders remain flexible in their trading.
There can be sharp moves lower like we saw from Tuesday into Wednesday, and equally as sharp moves to the upside like we saw from the low yesterday to the high in the early Asian session today. That in turn was followed by another fall today.
Although there is sharp moved, the technical clues can be used to help pick spots where risk can be defined and limited. If you are wrong, you lose a little. If you are right, you stand to "make more than a little" (i.e. the risk on the trade). To do that, you need to lean against something and believe in it.
The 50% above. The 200 hour MA below. The 100 hour MA in between. All those levels are potential trading levels. Look for them. Do your trade and hope to "make more than a little.
PS The Bank of Canada announced last week that would conditionally pause rate hikes and Macklem said on Tuesday that if the projections go as planned, the BOC would not need to hike again. One "condition" will be the employment report which will be released on Friday. The expectations are for a move back down to 15K vs the surge last month of104K. The unemployment rate is expected to tick up to 5.1% vs 5.0% last.