Not long until the BOC rate decision so what levels could be in play?
Time to get set for the big event of the day and the Bank of Canada monetary policy meeting. Whatever happens, it’s set to be a wild ride in CAD pairs, and that means there’s a lot of danger lurking. I can’t overemphasise that fact enough. The loonie has been very volatile lately and this is the number one event for the CAD, so traders need to be ready and even more in control than usual. We could see some very big and wild swings and probably my best advice is to sit this out and wait until things settle down. For some, this could be an event that wipes out trading accounts. At the very least, traders should keep their risk and trade sizes to a minimum. This is not the time to be a hero.
If you are stepping into the ring, here are some of the levels to watch.
I think it’s pretty pointless to even think about any levels within 100 pips of the current price. The support we’ve seen recently down to 1.2400, 1.2370 and 1.2350/60 won’t count for much so I’m really looking at the 1.2250-1.2200 area as my first point of call for any slow up if they hike. After that I’ll rely on the 2017 lows in the mid-1.20’s.
Above, 1.2587 is the 100 DMA , and a prior decent resistance area. Over that 1.2660/1.2700 is the next area I’ll be watching. Due to this possibly being a wild time, I’m really only going to be looking at the bigger and stronger looking levels, rather than the lesser, and lower timeframe ones.
As per my BOC preview yesterday, I’m still favouring a no hike from Poloz and my choice of trade will be to drop a buy entry stop order in around 100 pips above the market seconds before announcement. I’m hoping a 100 pips will keep me out of any whippy trouble but you never know with this pair at the moment. On a hike, I’ll just have to decipher the details and see how the price action looks after but I have less inclination to trade that scenario.
Good luck if you are trading it, and stay safe.