The loonie is on the march as the dollar gets beaten up from all sides. The May support line and 100 dma were taken out last week, despite a good effort at offering support. The break will look to hit the previous lows at 1.0273 and 1.0244 and then it’s the 200 dma at 1.0206 and the long term Sep 2012 support line at 1.0200.
USD/CAD daily chart 16 09 2013
Back in mid-August I highlighted that there was a nice tight confluence of the weekly moving averages. Since then the 55 wma has crossed the 100 & 200 ma’s and the 100 is looking to cross the 200 ma. Either way the difference between them is now 27 pips making the confluence even tighter. The wma levels are at 1.0126 (55) 1.0113 (200) and 1.0109 (100).
USD/CAD weekly chart 16 09 2013
If the dollar takes a further battering then we will find ourselves down at the Sep support line pretty quickly and while I was looking to start building a long from here back in August I’ll likely reduce the size of the initial position to incorporate any FOMC risk. The mix of wma’s will give me a second point to add to the position and parity (should we get there) will give me a third and final point to build the longs. A sustained break below 1.000 will see me tip the position in the river.
It’s another ‘wait and see’ trade but that is the essence of part of my trading style. I’ll never chase a trade and always prefer them to come to me. I was mostly sitting on my hands over the summer, and as I thought, September is giving us the moves and directions.