Entering into a tactical short position on USDCAD. This is a pure position play, medium to long term I am bullish the USD, however I believe CAD is in oversold territory. USD is on a rip right now due to Powell pivot which the USD should be supported by US yield vs bond differentials. CAD positioning is in oversold territory ever since the last Bank of Canada rate meeting. There is an event risk in the upcoming BoC meeting but I would rather enter now and re-enter if I do get stopped out.
Technical perspective - two cup and handle patterns finished, one on the left between April - July and another between Aug - Dec (orange fractal) and in between both was a head and shoulder pattern (in purple). Speculating that a another potential head and shoulder pattern will form again where I am entering on the left shoulder drop + a bearish Engulfing candle + a close below the 5 EMA.
US10/CA10Y bond differentials are supporting a lower USDCAD paired with an oversold Oil primed to return to the 80s level.
OIL vs USDCAD
US10Y vs CA10Y
Backwardation Oil contracts support CAD strength
Technical perspective - two cup and handle patterns finished, one on the left between April - July and another between Aug - Dec (orange fractal) and in between both was a head and shoulder pattern (in purple). Speculating that a another potential head and shoulder pattern will form again where I am entering on the left shoulder drop + a bearish Engulfing candle + a close below the 5 EMA.
US10/CA10Y bond differentials are supporting a lower USDCAD paired with an oversold Oil primed to return to the 80s level.
OIL vs USDCAD
US10Y vs CA10Y
Backwardation Oil contracts support CAD strength
Trade active:
TP1 Reached- Stop loss moved to breakeven.
Trade closed: stop reached