USDCAD Trade Idea
Cycle and Seasonality Lining Up
Hello everyone,
First of all, I want to thank you for being a loyal subscriber to my work. At the moment, I’m busy with a few major projects for some well-known companies in the industry (most of you probably know what I’m talking about) Once those are done, I have big plans for Clarity Edge Analysis and for all of you here.
Today, I want to share one trading idea I’m watching closely for the coming weeks: USDCAD, where I’ve combined both cycle analysis and seasonality.
The Dollar Backdrop (DXY)
Let’s start with the U.S. Dollar Index (DXY).
For the last 15 years, ever since the global financial crisis of 2008, the dollar has been moving within a well-defined channel. Right now, price is consolidating at the channel lows, which I view as a possible accumulation zone.
The keyword here is possible. Most fundamental and macro analysts are bearish on the dollar, so this view goes against the majority. That’s why confirmation is critical. If the consensus is wrong, price action will be the first place we’ll see it.
Historically, USD bottoms tend to occur every 100–300 days, with an average around 150 days. We’re currently at roughly 80 days into this cycle, which suggests there may still be a few months left of consolidation before a stronger move develops.
Zooming in on USDCAD
Turning to USDCAD, we recently bounced off a trendline that has acted as both support and resistance since 2021. After a clear accumulation phase, the pair broke higher, only to establish another range just above it.
To me, this looks like a bullish confirmation in market structure. Note the sequence of red (down) and green (up) paths marking shifts in structure.
But what about those blue vertical lines? That’s where seasonality comes in.
Seasonality Edge
Looking at the Seasonax seasonality chart, history shows that buying USDCAD in September and selling in December has been profitable over 70% of the time in the last 15 years, the same timeframe as our DXY channel.
So, if the dollar is indeed in the process of bottoming, USDCAD could be one of the best vehicles to position long, thanks to both structure and seasonality lining up.
The Trigger
That said, confirmation remains key. For me, the trigger would be a break and retest of 1.38585, or simply a daily open and close above that level.
Without that, it’s just an idea. With that, it becomes a setup.
That’s it from me today. Good luck with your trading in the week ahead, and remember: no trade is better than a bad trade. Plan your week, then trade your plan.
— Jonatan