USD to CAD Candle Chart - January 30th 2009

USD to CAD Candle Chart - January 30th 2009

Yesterday saw an up day, which created a two bar reversal pattern following the down day of Wednesday on the usd to cad pair. In essence the two bars combine to create a hammer candle, and whilst this is certainly not at a bottom, it does indicate a small reversal in the short term. In addition yesterday’s price action touched the 9 day moving average, and it will be interesting to see if this “trend” continues this morning in early trading which seems to be the case. The usd to cad is very difficult trade with any degree of confidence at the moment, either in the short term or medium term, due to the volatility we have seen recently, and the sideways trading range that seems to be prevailing at the moment. Longer term I still favour a bearish move lower. My suggestion for today, and for the next few days would be to stay out, until we we see some further confirmation of the future direction.If you HAVE to trade today ( scalping or intra day) then based on yesterday I would suggest small longs and take any small profits off the table quickly!!

The other reason for staying out is that we have the Canadian GDP figures released later this morning. These figures are released monthly, and Canada is unique in that the figures are “fresh” each month, and so provide a very clear and up to date view of the broader economy. These figures will always have a major impact on the Canadian dollar, and the usd to cad currency pair in particular, given the close trading links between the two countries. The forecast is for -0.5%, against a previous of -0.1% and if the figures are better than forecast then this is generally good news for the home currency, the Canadian dollar. Have a great weekend and good luck with your trading.

The short term is sideway, the medium term is sideways and the long term bearish