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Bank of Canada Tonight: USD/CAD Retest:
The Victoria Day long weekend has come and gone for traders of the Canadian Dollar and we’re back full steam ahead for tonight’s Bank of Canada rate decision.
USD/CAD has rallied hard into tonight’s BoC meeting, but has paused at the previous bullish trend line that price is currently re-testing.
With the most previous inflation number beating expectations, the BoC actually has a bit to be positive about heading into the release.
They aren’t expected to cut rates, but any change in tone could see volatility across the various CAD pairs. Will the bank remain optimistic as the price of oil continues to rebound, or will the production lost during the most recent wildfires that swept through Alberta weigh on the country’s bottom line and therefore the bank’s position?
With the amount of uncertainty heading into the release, it’s no surprise that we technically find price sitting right on a significant support/resistance level.
Back in early May, we spoke about the USD/CAD resistance zone that price was approaching at the time. We were in the early stages of the most recent bout of USD strength and momentum was clear.
“With the momentum break and re-test of the major bullish trend line all but erased in barely two daily candles, this horizontal zone might not be the level to be blindly fading into.”
Chalk up another failed textbook pattern.
To make money in this game, you need to be a little smarter than blindly selling breakouts.
However, while it may not have been a textbook breakout and re-test, the support/resistance zone in question did still re-activate on the support side at the marked ‘red x‘.
I’m a little disappointed I didn’t see this one earlier as it gave two long wick chances to get in on the buy side. The second with unbelievably good risk:reward!
Come on Twitter, help us out here!
Charts of the Day:
What’s a Canadian Dollar chart without an accompanying oil chart, right?
Oil has continued to step higher without even the hint of a pull-back. Is that about to change as price touches the following zone?
On the Calendar Wednesday:
EUR German Ifo Business Climate
CAD BOC Rate Statement
CAD Overnight Rate
Dane Williams – @VantageFX
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