(MENAFN- Daily Forex)
Violent trading developed in the usd/cad yesterday as a high of about 1.36400 was flirted with momentarily. The whipsaw-like flurry of price velocity in the USD/CAD likely caught speculators by surprise. Full trading volume returned with a vengeance after the long U.S holiday weekend and it looks like financial houses certainly had positions that needed to be placed for customers the past two days. Explaining away the sudden and violent move in the USD/CAD is not easy.
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After the Surge Higher a Reversal Lower has developed in the USD/CAD
The move higher yesterday may have been destructive for speculators who were selling the USD/CAD without stop losses working. However, the move occurred with the backdrop of a move higher having taken place on Monday. It should be acknowledged that on Friday before going into the weekend the USD/CAD touched a low of nearly 1.33200 before starting to rise.
The USD/CAD is now trading near the 1.35350 mark with its typical quick-hitting price changes on display.
After the sudden rise upwards earlier this week, speculators may feel burned if they were pursuing downward momentum, and uneasy about trying to do so again. Traders who have embraced solid risk management though may be willing to step into the fight again.Important Support Technically is within Sight for the USD/CAD
The jump higher in price for the USD/CAD likely caught many traders off guard yesterday. Now the question is if the current short-term reversal will build momentum or run of power. Support near the 1.35300 to 1.35200 could prove significant short-term. If selling persists in the short-term this may signal another move lower by the USD/CAD as financial institutions look for equilibrium.
It is difficult and foolish to argue with the results of Forex, but the move in the USD/CAD raises suspicious considerations. Perhaps the USD/CAD may have been perceived as being oversold late last week. However, from a technical viewpoint and judging the broad Forex market, yesterday's advance higher does feel like it may have been too strong.
Speculators who are willing to look for slight downside price action towards the 1.35300 to 1.35200 in the short-term may find opportunities if they can use their risk management wisely.
Traders should not get overly ambitious. Yesterday's upwards climb in the USD/CAD is a reminder Forex can prove dangerous.
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