Canada Building Permits came in stronger-than-expected today at 11.8% vs. -5.0% estimate. Moreover, last month was revised higher 16.4% vs. 13.5%. Despite the better data, the USDCAD has moved higher (lower CAD), as the market could not muster any downside momentum off the data.
Looking at the daily chart, the price today has moved above the 200 day moving average (green line in the chart below), at the 1.0894 level. Admittedly, the pair has traded above and below the 200 day moving average over the last 5 days trading. This says to me, that the market is unsure of the next directional bias for the pair. Nevertheless, traders will look to use the moving average line, as a clue to the directional bias. Trading off the breaks may result in a small loss if the momentum is not maintained, but eventually we should see a trend move break either higher or lower (i.e. a move away from the 200 day MA) and that is where the money will be made. Risk a little. Make more than a little is the goal.
USDCAD extends above the 200 day MA at 1.0896
The failure to move lower off of what was pretty good data today, has shorts covering.and the price now trading at the high for the day. Although it is tempting to fade the move (after all fundamentals from the data point lower) I prefer to listen to the market thoughts (via the price action and technical tools), not my own. The bias is cautiously bullish.
Looking at the hourly chart below, the price today opened below the 200 hour MA (green line) but quickly moved back above that level after finding support against the 1.0875 floor-ish level. The grind higher has not been without it’s ups and downs – especially around the 100 hour MA and 200 day MA at the 1.0994-96 area – but post the economic data,the pair has maintained a bid. The price is now also above the 50% of the move down from the August 26 high to the low reached on August 29. That level comes in at 1.0903 and is now intraday support/risk defining level for me. Stay above this level and the buyers remain in control. Move below and there may be some disappointment with the break and a rotation back toward the safe level at the 200 day MA.
Eventually, the price will move away from the cluster of MA’s on both the hourly chart and the daily chart. It is a matter of time. Sometimes that move is started with a catalyst – like a fundamental piece of news. Sometimes it is off a desire to move away from technical levels. In either case, listen to the market, and follow the technical clues. Don’t be afraid to take a small loss if momentum does not materialize. However, if there is a break look to ride the move….
The USDCAD is now above the 50% at 1.0903. Stay above will be a clue the buyers are in control today (risk defining level).