The gaps are closing after oil meeting shambles
USDCAD gapped up when FX opened after the weekend news, and that's all being undone as the market shrugs and says "so what?".
USDCAD H1 chart
Right now we're back under 1.2900 after touching a low of 1.2863 and it's here that the next move could be defined. The 1.2900 level was the area of resistance last week after the break of there and 1.2800/20. If we manage to hold below for any length of time we are likely to see that downside tested again.
USDCAD daily chart
One of my big rules before trading any level is to ask; "Why is the price is here?". Looking at a chart and picking a level is fine but we always need to assess the trade on its merits at the time and not just blindly trade a level because we spotted it some time ago.
For me there was just too much risk and too much influence from other factors at play. It scared me off the trade. Technically the break of 1.28 was text book as it held a retest for a while. We've also seen it become support since breaking back above. If the oil noise settles down a bit more then I may be inclined to think about trading 1.2800/20 again. At the moment the risk is that oil doesn't continue down as many expect and from that we get a far stronger bounce that will send USDCAD lower once again. After the break I'd certainly trade it tighter than I might have initially.
Looking at the daily chart I'd pick 1.3370 as a juicy level to short, what with an old S&R area and the two daily ma's. Throw in the 55 wma at 1.3107 and that's a nice looking low risk short set up.
I'll keep asking the 'Why' question before trading any of the that, and If I don't like the answer I'll leave them be once again.