Loonie (CAD) Poised For Strength?
The Canadian dollar (CAD) aka the Loonie, looks to poised to strengthen again from a short-term perspective which could turn into a longer-term trade. A double-top formation has occurred on the 30-min chart vs. USD which indicates that it could strengthen.
This morning’s better than expected retails sales figures show that there is still some strength in the economy as the sales grew twice as much as had been forecast. Also, the Canadian dollar’s tight correaltion with oil should boost it as oil prices are hovering around $100 and demand for heating oil hasn’t even picked up yet as it has been fairly mild so far.
Considering that the year’s high for USD/CAD is at 106.50, the most likely case is for this pair to sell-off which in forex terms would mean Loonie strength. Of course if problems in the Euro zone persist all bets are off, but at this point I would be selling this pair at 103.75 with a stop just above the 104.5 R1 daily pivot resistance. Target price is 102.