Loonie Trade Idea

In 2010 the Loonie (the USD/CAD currency pair) found support at the 0.9980 level. On the daily USD/CAD chart below the blue line indicates the 0.9980 zone where the USD/CAD found support several times, including October 2010 and a few times in November 2010.

In October 2010 and November 2010 the USD/CAD found support at the 0.9980 level.

The 0.9980 zone is thus established as a great place to watch for price reversals (you can also see this pair find support at this level in June 2008 and April 2010). Recently we see that this pair has broken through the 0.9980 level and has recently touched this zone from below. We see that this same 0.9980 zone has now served as resistance.

We see this behavior over and over again on the currency charts (or any other market for that matter). The USD/CAD is likely to start trading lower. On the USD/CAD 1 hour chart you can see that this level has served as resistance twice recently. I am willing to take a sell trade on the USD/CAD now based on this simple price action.

If you agree, where do you think the USD/CAD will fall to?

Based on recent price action, it is likely that the USD/CAD pair may trade lower over the next several days.