Here is a quick snapshot of today's implied volatility support and resistance levels for USDCAD, EURCAD, GBPCAD and CADJPY ahead of today's CA CPI data.
USDCAD: 1.3837 (resistance) - 1.3760(support)
EURCAD: 1.6150(resistance) - 1.6030 (support)
GBPCAD: 1.8700(resistance) - 1.8570 (support)
CADJPY: 107.60 (resistance) - 106.50 (support)
Looking at the EURCAD specifically, the pair is currently rejecting from a huge multi-year level of resistance around the 1.6150, with decent confluence with the implied volatility level as well. Big level to watch for those trading the EURCAD.
These levels are based on 1-month implied volatility and can be used as dynamic and market-based levels of support and resistance.
These levels on their own are quite handy, but when we combine them with technical analysis tools like pivot points, or fibs, or psychological levels, you can identify potential entry, take profit, or stop-loss levels with more increased confidence.
What's unique about using implied volatility is that it provides a totally objective and data-dependent price range to complement your subjective technical analysis.
