Canadian Dollar Sideways TrendSubmitted by PI Financial Corp on May 18th, 2020
Since March 25th, the Canadian Dollar on the June futures has traded between 70 and 72 cents approximately. Positive news for oil helped increase the Canadian Dollar recently.
On the demand front, oil consumption has returned to the pre-coronavirus levels in China, according to Bloomberg.
Also, they reported that the number of tankers used for storage at sea have started to decline.
Finally, with most countries reopening, there is a possibility that oil demand will continue increasing.
While this is positive news for the Canadian Dollar I question how much higher above the 72 cent resistance it can go.
For suitable clients, I implemented a strategy in the end of March to take advantage of a sideways trending Canadian Dollar.
Clients collected money from selling a call option on the Canadian Dollar.
Each Canadian Dollar option they sold collected $750 approximately per contract for this one month strategy.
If you think a market is going to trade sideways whether that is the Canadian Dollar, wheat, or canola selling call options can be a profitable strategy.