USDCAD:
There is always a period of hightened volatility when a pair trades through the moving averages as it typically triggers position realignments. When a pair remains within the major moving average’s range the volatility extends itself until the market dictates overall guiding sentiment. The CAD exemplifies this point to the tee. When trading inside of the major MA’s ranges your stops often have to be a little wider due to the volatility in order not to get stopped out to easily. It becomes especially important to pick your entry levels carefully. The CAD has now met Resistance at the 100 day MA twice (see red arrows) also knows as a double bottom. Therefore a solid close below the 100 MA would trigger a bullish entry signal while a close above Support at 1.0650 could trigger a bearish entry signal. In between those ranges on the daily chart and you face potential stop loss triggers due to excessive volatility.
EURUSD:
You can not define a level of Resistance any better than what we are seeing with the EUR. The EUR closed above the 100 day moving average for the first time since December of 2009. Typically that would be enough to generate some nice price action on the breakout. However, buyers were not prepared to step in above 1.30. Traders who rode the rally from the mid 1.20’s took profit and are waiting for the EUR to close above 1.30 before resuming a possible long EUR position. If the EUR closes below Support at 1.2730 the EUR will likely retest the 50 day MA.
OIL:
Similar to the CAD analysis above Crude Oil is also trading between it’s major moving averages which is why we are seeing major volatility. Oil has met Resistance at $79 a barrel going all the way back to late June. A close above Resistance at $79 would be significant while a close below the 50 MA at $75 would put Oil prices under further downward pressure.
Written by bforex.com
