The USDCAD currency pair is currently trading in a narrow range as the market looks for direction. Momentum has slowed down, and traders are waiting for a clear signal to guide the next move. Support is noted at the 100-bar moving average on the 4-hour chart, close to 1.37414. If the price falls below this level, it could weaken the short-term trend and lead to further price corrections.

Technical Levels to Watch

On the upside, the 100-day moving average has been a strong resistance after being tested multiple times this week. Sellers continue to push prices down at this level. A clear breakout above the 100-day moving average would suggest a bullish trend, potentially lifting momentum. The video included explains these technical levels in detail and highlights what traders should track in upcoming sessions. For real-time market data and analysis essential for decision-making, visit investingLive.com. The USDCAD pair is currently stuck in a narrow range as the market digests recent economic data. This was evident after the US July inflation report showed a slight dip to 2.9%, which hasn’t prompted the Federal Reserve to change its steady interest rate policy. As a result, the pair lacks strong fundamental forces at this time. For those anticipating a breakdown, keep an eye on the key support level around 1.37414. A drop below this could be triggered by unexpected increases in WTI crude oil prices, which have been around $85 per barrel, or surprisingly strong Canadian employment numbers expected next week. Traders might consider buying puts with strike prices near 1.3700 in case of this movement.

Strategic Approaches for Traders

On the flip side, sellers remain active around the 100-day moving average, limiting any upward price movements. For a bullish shift to occur, a strong catalyst is needed, such as unexpectedly hawkish comments from Fed minutes or indications of Canadian economic weakness. Purchasing call options with strike prices just above the 100-day moving average could be an effective trade for this potential bullish trend. Given the lack of momentum and the overall uncertainty, implied volatility for USDCAD options has been decreasing. This scenario makes strategies like a long strangle appealing, where traders buy both an out-of-the-money call and put option. This position would profit if there is a significant price move in either direction, which could occur after the next Bank of Canada policy meeting. If you think this tight range will remain, similar to the low-volatility environment seen in spring 2024, selling options premium could be a good strategy. An iron condor allows traders to profit as long as the pair stays between key support and resistance levels. This strategy leverages time decay, which erodes option values while the market awaits its next significant move. Create your live VT Markets account and start trading now.

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