USDCAD finally breaks the last big multiyear fib. What's next?
The 61.8 fib was the last big fib from the 2002 fall from 1.6196 and it broke yesterday
USDCAD weekly chart
The next technical hurdle is the trendline from 2005 at close to 1.3592. The next sticky patch for the pair is around the 2003/2004 area so I've zoomed in to get a better look
USDCAD weekly chart
Trading the long term picture can be very profitable but requires a lot of patience. If you prefer the lower timeframes then it pays to have one eye on the bigger picture.
There's four levels that I would deem important for this area. The first of which appears alongside the trendline in the first chart at around 1.3600. It's marked various points where we've found support and resistance and the price has struggled to close above or below. 1.3830/45 has been another similar area, though less developed. 1.4000 is stronger as we've not managed a close above since falling through it
To trade the longer term levels you would usually need to give yourself a wider berth on stops and therefore a lower trade size. The 1.36, and more so the 1.40, levels can be traded shorter term as big figure plays but to play the long game on a level, like short at 1.40, I would be looking at a stop above the higher 1.42 level. Similarly a break long at 1.40 would likely run into trouble at 1.42
The what next conundrum always crops up when we break big levels so it can be a case of waiting for the next levels to come back into play. That applies to recently broken levels as much as new or more older ones
The CAD is in the grip of the oil trade so that's where the focus should be right now. As I type we're up testing the trendine as oil slips again
USDCAD is also going to get a boost on the FOMC reaction if they hike. Conversely, should they not, and the pair dumps, then that might give an opportunity for longs if oil keeps sliding
In case you're unsure of the oil/CAD correlation here's the weekly chart overlaid with WTI
USDCAD & WTI weekly