USD to CAD - Weekly Candle Chart - 2nd March 2009

USD to CAD - Weekly Candle Chart - 2nd March 2009

After several weeks of consolidation in a relatively narrow trading range as shown on the weekly chart, we could be seeing the first sign of a breakout to the upside this morning, with a gap up on the opening and a move higher, with the 1.2800 region now providing some solid support to any retest lower. All the moving averages are now suggesting higher prices to follow, and the 9week and 14 week averages are about to cross, so this would seem to be an opportunity for a longer term buy position to be opened shortly. It is interesting to note that last weeks candle bounced off both these averages which again suggests that the move has some momentum, with the gap up this morning adding some weight to the view. My suggestion as always for longer term trades is to watch the weekly chart for direction, and to use the daily charts for your entry and exit points. My only slight concern with opening a trade today is that we have yet to clear the well defined top at 1.3000 which once again could provide a turning point for any move higher – if you feel confident then I would suggest opening your position shortly, but if you prefer to err on the side of caution, then I would wait until this level is cleared and becomes support to the move higher.

The GDP figures are due for release shortly in Canada which is unique in it released these figures monthly. A quarterly GDP is also released, but this is merely a summation of the monthly figures. The forecast is for the same number as last month at -0.7%. If the actual are better then forecast then this is generally good for the Canadian dollar. The other economic news out today is in the US with the release of the ISM manufacturing data, and details of these can be found on the live TV news channel, or on the economic calendar along with the latest currency news. Alternatively check with your ECN broker.

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