Trading opportunities for currency pair: idea about the pinbar from 4th May is still valid. In addition, a double bottom has formed. After a 1.2206 break, it’ll receive a confirmation. Taking into account this price model, the price zone was in the range of 1.2297-1.2494. The idea for growth will be cancelled out if the week closes below 1.1939.
On 4th May I did an idea on the Canadian. Since the US dollar fell against its Canadian counterpart in the first half of the week, the validity of my suggested pinbar started to be questioned. I don’t know what your wave is connected with, but the price didn’t go over 1.2206. A Buy Stop order for the pinbar needed to be placed at precisely this level.
It’s no coincidence that I warned in that review that the pinbar is a reverse setup, but it never works out very accurately. The candle with a long shade doesn’t guarantee it coming off 100%.
What do we see when we look at the close of last week? The USD/CAD rate fell to 1.1939 and closed at 1.2079. The dollar dropped to 1.1939 due to oil going up. Brent crude hit 69.63 dollars following the publication of a report from the Ministry of Energy. Statistical data for last week showed a reduction in US oil reserves by 3.882 million barrels (forecasted +1.5 million barrels).
A correctional phase from the 70-dollar psychological level has started. Oil cheapened from its 69.63 maximum to 64.23 (including Friday). In connection with this the USD/CAD rate renewed to 1.2161. The dollar drew more strength from data on the US labor market published on Thursday. On Friday we saw high volatility on the market due to data on employment from the US and Canada.
According to the Department for Labor, April job creation in the US stood at 233,000 against a forecasted 224,000. For February the statistics were reassessed from 264,000 to 266,000. In March it was reduced from 126,000 to 85,000. Unemployment fell to 5.4% in April from 5.5% in March. The US April average hourly wage index increased by +0.1%.
The Canadian office for statistics announced that in April the Canadian economy’s job creation was -19,700, whilst unemployment remained unchanged at 6.8%. Market expectations were: -5,000 job creation and a growth in unemployment to 6.9%.
The initial reaction to this statistical data was a fall in the rate of the dollar. However, this tendency didn’t develop into anything substantial. Then all key pairs saw fluctuations in different directions of around 70-80 points. As I see it, the US data was decent (despite the reassessment) and from next week the dollar could realize this idea for growth.
Take a look at the daily graph. Two weekly hammers and a pinbar have formed a reverse pattern of a double bottom by the trend line on the daily timeframe. The dollars positions even grew stronger.
Whilst oil quotes are correcting, the dollar could quietly pass through the 1.2206 resistance and correct to 1.2297 (first interim target). In the idea from 4th May I wrote that, if the dollar hastens, a target zone of 1.2350-1.2400 should be considered. Taking into account the double bottom on the daily, this zone is in the 1.2297-1.2494 zone. All that’s left is to break 1.2206.
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