USD CAD Hits First Downside Objective on Hourly Chart

Based on the last major swing on the hourly chart, the USD CAD has reached its first objective at 1.2244.

Based on the last major swing on the hourly chart, the USD CAD has reached its first objective at 1.2244.

The main range is 1.1981 to 1.2507.  This range creates a target zone at 1.2244 to 1.2182.  Following a rally to 1.2472 yesterday to test the top, this market proceeded to post a secondary lower top with the target zone as its first objective.

This morning the USD CAD reached the top of this zone and is attracting some buying.  There may be another test of 1.2244 or the market momentum could take it straight down to the next objective at 1.2182.  The risk is the market retraces back to 1.2325 first.

The markets are reacting to news from the Bank of Canada regarding its quantitative easing plans.  Although no specific details were revealed, the consensus is it will be big.

If the plan is to print money and flood the Canadian economy with cash then this current break may not last much longer so consider exiting shorts in the target zone and think about the possibility of reversing to the upside if the market can establish support between 1.2244 and 1.2182.

The pop to the upside in gold may be attributed to the possibility of the Bank of Canada weakening its currency.