By IFCMarkets
Good afternoon, dear traders. Today at 16:15 (CET) we expect the publication of the new housing volumes in Canada, Housing starts. The indicator is released by Canada Mortgage and Housing Corporation, CMHC. The value is generated in annual terms (x12), but expresses the change in volume during the past month. The new construction stimulates job and service increase in the construction sector. This indicator also allows assessing the potential growth of the real estate sector and household domestic consumption. Currently a slowdown is predicted from 195,000 to 185,000 buildings. If the forecast is too underestimated, it is necessary to expect the strengthening of the Canadian dollar against the U.S. dollar.
Here we consider the USD/CAD currency pair on the H4 chart. The price went up to the D1 resistance line and performed a bearish reversal simultaneously with the formation of “absorption” candlestick pattern – marked in yellow rectangle on the chart. The descending direction is confirmed by the ParabolicSAR trend indicator and the PivotPoints channel. The price crossed the Pivot signal line downwards, which can be perceived as a bearish confirmation. Trend is also confirmed by the direction of motion of the RSI-Bars oscillator. We anticipate the breakthrough of oscillator at 50.22026, before the price trend consolidates.
It would be reasonable to place a pending sell order below the Bill Williams fractal support at 1.09054. SL can be chosen at the last fractal high, especially as it coincides with the historic value of the ParabolicSAR indicator – 1.09471. Opening a position, it is recommended to move the SL after the parabolic values every 4 hours after the order execution. Thus, we can optimize the return/risk ratio in our favor in the process of changing market conditions. If you decide to take a break from the market, the automatic trailing stop can be placed, taking the distance between the two previous fractal peaks into account. This distance is indicated by the double arrow on the chart above.
| Direction | down |
| Position opening | below 1.09054 |
| Stop loss | above 1.09471 |
Market Analysis provided by IFCMarkets