The USD/CAD pair is included on the list of the most popular currency pairs among traders. Almost immediately after its appearance in January 1978, the pair became one of the highly liquid trading instruments on Forex.
This currency pair originated mainly thanks to the discovery of huge reserves of crude oil in Canada. The country still remains one of the biggest oil exporters in the world. The creation of this pair was meant to simplify oil trading and set specific prices for each country.
Main features
The USD/CAD pair is quite volatile, especially during the New York session. This is why when analyzing the chart of its price movement, there are many long shadow candlesticks.
It is quite easy for traders to predict the future trajectory of this trading instrument. The pair rarely performs sharp swings for no particular reason. It helps investors avoid losses and trade steadily.
How to trade USD/CAD
The Canadian dollar is extremely vulnerable to any fluctuations in oil prices. Canada is one of the world's largest oil exporters. That is why when oil prices are rising, the lonnie grows exponentially and vice versa.
When trading the USD/CAD pair, traders often try to identify support and resistance levels, as well as the prevailing trend. This type of analysis gives more chances to make a profit. Historical levels help traders find the optimal entry points to open positions on Forex.
Before opening long or short positions on the Canadian dollar, traders should assess the situation in the oil market. It is also important to try to predict the future movements of oil prices. As we already know, any swings in oil prices have a great impact on the Canadian currency. Apart from that, it is crucial to identify possible trading patterns on the chart, such as triangles, head and shoulders, neck, and others.
