The Trade Plan

Strategy Session

I love using fibonacci retracements

• More frequent and larger bearish candlesticks
• Consolidation support or break
• Close to another rally point at 1.2750

I was not completely clear on the source of this sell off in spot Forex USD/CAD at 1.30 but its fair to say now the buyers of CAD are back and because of the relative weakness in the US-Dollar Index we have an opportunity in the commodity currencies. 

I am anticipating a revisit of the 50% retracement from 1.2250 (base of the rally) to 1.30 and that would be in line with the 1.27648 level - the mid point


Bearish Candlesticks

The pace at which the dollar is declining is become better.  The red candlesticks are in fact expanding their range which means we can anticipate the momentum to keep this pace.  Where it is now it would stand to reason that it would move in 50-pip intervals, it is a wild currency pair!

Consolidation

The yellow box drawn in the middle was the last break point for the US-dollar bulls now that they have managed to realize the goal of hitting 1.30 they would really test their faith on the bottom line of the rectangle at 1.28081; a

rip though support would be damaging psychologically

Rally Point

The 1.2750 level is important because the consolidation/break-out occurred on 4/23 right there and it sits just below the 50% retracement.  There are willing buyers eager to load the truck on the dollar index there, and "meeting them halfway" would work but the markets don't necessarily have to treat the 50% retracement as if it were as powerful as reinforced concrete, meaning it can drift just below the 50% at  1.27648. The 1.2750 is an important rally origin and if it tests and successfully holds it could be the rally in the CaD most traders were looking to fade.