This is totally based on oil's next move. Near 40, Oil is in neutral territory. Earlier we mused about buying the dip in oil near 40 but still haven't done it because from price action it looked like we could have got it cheaper near 38. But unfortunately, oil is now back above 41. Since 42 is the resistance, we are less inclined to jump in. Also today is NFP day and US dollar could be very volatile during the data release.
If everything else remains equal, USD/CAD can bring great disappointment to the longs. Idea is to short USD/CAD during the bounce near 1.3060 or higher 1.3100, which corresponds to the support in oil near 40.50. But as we have mentioned earlier, USD/CAD has strong correlation with crude oil and price action must be judged accordingly. Based on the thesis that oil will be supported near 40 / 38, at least for the short term, gives us an opportunity to short USD/CAD on meaningful bounce. So price action in USD/CAD is less meaningful, rather we take action in this currency pair based on oil's price action.
Crude oil stabilization coupled with dollar weakness could bring USD/CAD back to 1.27 or below easily.
Also, we don't want to give up on AUD/USD and NZD/USD long bias yet. But to get better pips, we got short EUR/AUD earlier.
If everything else remains equal, USD/CAD can bring great disappointment to the longs. Idea is to short USD/CAD during the bounce near 1.3060 or higher 1.3100, which corresponds to the support in oil near 40.50. But as we have mentioned earlier, USD/CAD has strong correlation with crude oil and price action must be judged accordingly. Based on the thesis that oil will be supported near 40 / 38, at least for the short term, gives us an opportunity to short USD/CAD on meaningful bounce. So price action in USD/CAD is less meaningful, rather we take action in this currency pair based on oil's price action.
Crude oil stabilization coupled with dollar weakness could bring USD/CAD back to 1.27 or below easily.
Also, we don't want to give up on AUD/USD and NZD/USD long bias yet. But to get better pips, we got short EUR/AUD earlier.
