USD to CAD Daily Candle Chart - 9th February 2009

USD to CAD Daily Candle Chart - 9th February 2009

If you have read my analysis for the weekly chart, then I’m afraid I am going to be repeating myself here, so many apologies in advance! As you can see, the pennant pattern of the weekly chart is repeated here in the daily chart for the usd to cad currency pair with the point forming somewhere around 1.2400. As I have been suggesting for some time, we need to wait for a clear signal, which will come from a volatile breakout from the current pattern, and will provide the direction we need in order to re-enter the market. If you are trading currency options, then this is an excellent opportunity to open a straddle trade in the pair, and my suggestion would be to look 1 to 2 months out. Remember you need time to be on your side in order to benefit from the trade as options are a wasting asset, and in addition we need to be sure that we have allowed enough time for the expected volatility to arrive!  So if you are simply trading intra day in the spot market, then I suggest you wait until there is a clear signal but if you are happy trading currency options, then this is the perfect setup for a straddle trade. There is virtually no fundamental news out today, either in Canada or the US.

The short term outlook is sideways, the medium to long term is bearish.