We hate to pump our own tires too much but it has been a good week for fxbeer.com and it’s only Wednesday. Our short EUR/GBP call on Monday is up 145 pips and our short EUR/USD call a day ago has been sensational, up 184 pips. In total, that’s 329 pips in 48 hours and while we would certainly take some short-term profits, the trades still look like winners.

Today we’re going to step away from the euro and look to North America. The commodity currencies got hit hard on Wednesday in an exciting day of trading and the most volatile session on the year. The kiwi was the worst-performing currency but the Canadian dollar was close behind and blew through resistance, with USD/CAD rising more than 150 pips.

This move has caught is by surprise as we are big, long-term CAD bulls. We will never fight a chart though and this one has turned against the CAD in a big way.

We can see that the stochasics on the bottom chart are showing a buy signal and the RSI still has some way to go before it’s into oversold territory.

The huge reversal today above key resistance at 1.0406 to as high as 1.0487 is a buy signal. We would have liked to see a close near the highs but still think this move targets 1.0582, and if that breaks, likely to 1.0743 as we re-enter the Nov-Dec trading range.

On the bottom of the daily chart we see that there is now the potential for a double-bottom that could target as high as 1.14. We’re not quiet ready to go there yet because of the price action on Oct. 20 and 21.

You can see a very similar move to the once we saw today on Oct. 20, extending into Oct. 21, when USD/CAD rose to 1.0582 before we saw a minor retracement. The pair eventually rose all the way to 1.0850. We will be keeping a close eye on price action in the day ahead. If we can see a close above 1.0441 we will certainly be encouraged.

In the short-term, look at 1.0406 as support with resistance at 1.0489-1.05. We expect to see some consolidation in the Asia-Pac and European sessions before a convincing move on Thursday (likely higher).