Fundamentals... Post BoC rate decision where the bank raised rates by a quarter point to 1.75% from 1.5% initially USDAD strengthened breaking through 1.30 handle only to close the session back above. And in todays session weakened against the us dollar still holding above the 1.30 level. This doesn't match not only the rate hike but the hawkish guidance communicated by BoC... however with the recent 15% fall in the price of Oil from its recent peak (picture in comments) USDCAD has weakened... which makes sense. A stronger US Dollar off the back of weak EUR and GBP due to ECB rate decision today where Draghi tried his best to sound optimistic about the slowing and politically sensitive Euro Area but failed to prop up markets. An important factor for this breakout then is a) Oils next move, does price rally higher or continue to the downside, Technicals suggest while the multi month trendline has been broken is bearish. And B) If USD continues to strengthen as DXY is looking very bullish and getting ever closer to key resistance at 97. For this breakout to really work want to see a strong USD and fall in oil prices, perfect scenario.
Looking at market sentiment: CAD shrugged off bullish news and continued to weaken which is important. Could imply sentiment is bearish for this market.
A confirmed break and close above 3125 will set up the trade, looking to take profits along the way and tightening the stop loss. With a 50 pip stop loss trade offer 5 to 1 returns.