Poloz Whipsaws USD/CAD, But Still Set to Breakout

October 25, 2016

The Canadian Dollar is in focus today as Governor of the Bank of Canada, Poloz testified before the House of Commons Standing Committee on Finance in Ottawa.

“We have to weigh the risks of waiting longer against what are the costs associated with doing something more immediate, our best plan right now, we think, is to wait for the next 18 months or so.”

Very standoffish indeed and you can see why the CAD immediately rallied as the quotes first hit.

USD/CAD 5 Minute:
161025_usdcad_5minute
Click on chart to see a larger view.

But as so often happens, sanity prevails as markets realise that these sorts of speeches are just full of empty rhetoric that has been said 100x before and we’re back on track in line with the technicals.

We normally take a look at USD/CAD alongside Oil due to their obvious correlation. But with today’s Poloz speech doing the damage we’ll let the pair stand on its own two feet.

USD/CAD Weekly:
161025_usdcad_weekly
Click on chart to see a larger view.

The weekly highlights the obvious bullish trend that price has been rocketing north within for a good five years or so. The fact that it’s gone basically vertical is a little bit of a risk for bulls, as you can see by that pullback off its highs twelve months or so ago.

But while not quite pulling back to the original trend line, price has printed a new parallel line just above it which has held and given a bit of a bounce.

USD/CAD Daily:
161025_usdcad_daily
Click on chart to see a larger view.

Zooming down into the daily chart where we can see today’s price action on the back of Poloz’s speech testing the upside of the short term channel.

I quite like the bullish nature of this test because it’s in the direction of the major trend and there seems to be some nice momentum behind the move if this 5 minute retrace is anything to go by.

Keep an eye on the @VantageFX Twitter for some intraday charts as we look to zoom down and find some entries. As always, don’t be afraid to share your own setups by attaching a chart and giving us a mention.

Have a great day!

———

On the Calendar Tuesday:
CAD BOC Gov Poloz Speaks
EUR German Ifo Business Climate

USD CB Consumer Confidence
GBP BOE Gov Carney Speaks
EUR ECB President Draghi Speaks

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Dane Williams – @VantageFX

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