USDCAD - When Price Action Defies Logic... Or Not?
The USDCAD made a new high at 1.38 in May and was subsequently met with a fierce downtrend for 1.5 months.
Many breakout traders would have bought into the breakout at 1.3560 and would have been handsomely rewarded with a gain of at least 240 pips in the first up move. Yet, the good times did not last. Retracement traders who hoped to rejoin the uptrend with probable longs at the retest of the 1.3560 area were smacked with a 240pip loss with last night's move. One might argue that the uptrend is still intact, and it is - only if 1.3200 holds.
Why do we say that price action defied logic? More USDCAD weakness expected attributing to:
a. Oil price weakness
b. Probable strength for dollar recovery given FOMC meeting on Thurs
c. Weak Canadian Data
So what then was the game changer? We would pin point it at Senior Deputy Governor at the BOC saying "current significant monetary policy stimulus in the system may be reduced, citing the ongoing recovery of the Canadian economy."
Many breakout traders would have bought into the breakout at 1.3560 and would have been handsomely rewarded with a gain of at least 240 pips in the first up move. Yet, the good times did not last. Retracement traders who hoped to rejoin the uptrend with probable longs at the retest of the 1.3560 area were smacked with a 240pip loss with last night's move. One might argue that the uptrend is still intact, and it is - only if 1.3200 holds.
Why do we say that price action defied logic? More USDCAD weakness expected attributing to:
a. Oil price weakness
b. Probable strength for dollar recovery given FOMC meeting on Thurs
c. Weak Canadian Data
So what then was the game changer? We would pin point it at Senior Deputy Governor at the BOC saying "current significant monetary policy stimulus in the system may be reduced, citing the ongoing recovery of the Canadian economy."