One last Stocking Stuffer in the USDCAD

One last Stocking Stuffer in the USDCAD

The USDCAD has the final high impact news releases before the Christmas holiday and offers a possible short to retrace the last major move in price.

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With year-end fast approaching, we can reflect on the huge gains the markets had this year.  Now that the December rate hike and the tax reform bill are passed, more and more people are taking their vacations and starting to recharge their batteries for 2018.  It’s already becoming obvious in the charts as volatility and volume are being sucked out more and more each day.   Although we are seeing fewer swings there are still a few remaining opportunities to close out the year.  Having USD and CAD high impact news just days before Christmas is giving us one of those.  Core Retail Sales and CPI for the CAD and Final GDP for the USD are both occurring at 830am EST on Thursday.  These news releases provide the catalyst we are looking for.  Taking a look at the USDCAD daily charts we see the area highlighted by the orange box as a zone that has been tested but previously very solid.  Some would say it’s only a matter of time before this area breaks since it’s been touched three times already, but if you look slightly higher we see more market imbalance leading to what many refer to as a trap!  The market still has about 70 pips to go before reaching that area so it’s an entry for the future.  The daily ATR is only 73 so it might be a bit of a reach unless the news is extremely off forecast. 

 

Taking things down a level we can use the 3-Hour chart to get a better look at what’s tradeable now. You will notice the green box which encompasses the remaining area back to the origin of the last strong move up in price which is about a 62 pip high box.  When we look at tonight’s spread and binary strikes there are a few standout options.  With the price currently at 1.28311, the Risk to get short the 1.2580-1.2830 Daily spread is about $24 at the time this article was written.  Setting a working order is a great way to capture a 1:2 or 1:3 risk to reward ratio. Alternatively, if you are a support and resistance trader you are looking to get long here for a similar $25 risk.  

 

Switching gears to look over at the binaries, the 1.2800 could be shorted for a risk of about $34 with $66 profit potential, the 1.2780, which is in the center of the green box has a risk of about $23.50 and profit potential of $76.50.  If you are more of an ATM trader, look at the weekly strike which is 1.2825. The risk on shorting it is $49 for a potential profit of $51 with two days to go.  One addition into using the weekly binary is on Friday morning there is CAD GDP news and USD Core Durable Goods news at 8:30 am EST, both considered high impact releases.  After that, we have just 3 more high impact news releases in 2017 next Wednesday and Thursday.  Although the currency market never “closes” expect ATRs across the board to tighten until trading resumes January 2nd, 2018.

 

 

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