Trade Watchlist: USD/CAD Descending Triangle Support

I’ve got this USD/CAD triangle formation on my radar as a potential play for the Canadian jobs release later this week.

Think we’ll see a breakout soon?

The pair is hanging out at the bottom of the descending triangle, still deciding whether to make a bounce or a break.

Loonie traders are likely holding out for the release of Canada’s February jobs report, which is expected to show a 98.5K rebound in hiring.

Stronger than expected results might be enough to spur a downside break, followed by a selloff that’s the same height as the chart pattern or roughly 150 pips. Weak data, on the other hand, could lead to a bounce back to the triangle top or even an upside breakout.

As Forex Gump mentioned in his event preview, leading indicators like they Ivey PMI point to a potential upside surprise in employment. After all, several provinces have recently reopened following tightened restrictions in previous months.

Although the U.S. economy is in for another boost from Biden’s stimulus plan, it appears that the vote of approval has lifted riskier currencies more than the safe-haven dollar.

Should this kind of market sentiment persist, the higher-yielding Loonie faces more bullish potential in the near-term. Keep in mind that the OPEC+ just recently extended their output deal by a few months, which is another point in favor of the oil-related Canadian currency.

What do you guys think? Any other trade ideas for the Canadian jobs release?