NAFTA came, problems brought. Trade in the USD/CAD currency pair on political uncertainty.

Good afternoon, colleagues and traders, and all those who participate in the dynamic life of the ForEx.

Today, let’s discuss another portion of news from their main generator in the financial markets in our “time of change” – Donald Trump. Namely, the US withdrawal from the North American Free Trade Agreement (NAFTA). To eliminate information gaps, let’s recap:

The North American Free Trade Agreement (NAFTA,  Spanish: Tratado de Libre Comercio de América del Norte, TLCAN; French: Accord de libre-échange nord-américain, ALÉNA) is a free trade agreement between Canada, the USA and Mexico. The NAFTA agreement was signed on December 17, 1992 and entered into force on January 1, 1994. It replaced the Canadian-American Free Trade Agreement.

The main goal of NAFTA is to remove barriers to trade and investment between the US, Canada and Mexico.

While the European Union is based on the concept of federal policy with the distribution of power between its organs – the Council, the Commission, the Parliament and the Court of Justice on the one hand and the member states on the other, NAFTA is building integration based on confederative relations between independent sovereign states. The interaction in the sphere of trade turnover in each of these states is supported by autonomous decision-making bodies within the framework established by NAFTA.

Goals of NAFTA:

• elimination of customs and passport barriers and stimulation of movement of goods and services between the countries participating in the agreement;
• creation and maintenance of conditions for fair competition in the free trade area;
• attraction of investments to the member countries of the agreement;
• ensuring proper and effective protection and protection of intellectual property rights;
• the creation of effective mechanisms for the implementation and use of the Agreement, the joint resolution of disputes and management;
• creation of a basis for future tripartite, regional and international cooperation in order to expand and improve the Agreement;
• creation of a single continental market.

(WIKIPEDIA)

If you discard the official part and a fairly abstract official description of the main goals of the NAFTA, then my vision is quite simple: this association was created with the goal of forming another pole of trade on the international commodity market as opposed to the European Union and OPEC. The question is, how did the NAFTA not please Mr. Donald? Everything is simple enough, instead of consolidating trade interests and the position of domination in the international arena, the main processes that began to happen inside have weakened the positions of the participating countries rather than strengthened them. The reason for this is the very weak foreign policy of the United States and Canada over the last 20 years of “democratic” power in the United States.

What does Donald want? It’s simple – the US dominance in the international oil market, and this Agreement in the format that it now does not suit. Therefore, we take the communist principle “we will destroy the old – we will build a new one” as the basis for the further development of events.

What are the possible consequences for the market? Here everything is simple – strengthening of competitive opposition in the region and increasing protectionism in trade relations.

How can all this now be used with advantage for our trade with ForEx?

• Let’s take the USD/CAD currency pair.

Trade recommendation: Strategic BUY

Rationale: Trump’s policy is aimed at strengthening the US position, also in relations with Canada. And the whole situation with NAFTA gives everything necessary for this.

Now the main focus is on the graphics (Figure 1).

Let’s first consider the older timeframe, starting with D1. Here we observe a formed candlestick spread for further growth and breakdown of the psychological resistance level of 1.2500. The pink zone (1.24-1.2500) at this stage gives a very good foothold, as a support zone, and limits the prospects for further decline. Prospects for growth are clearly visible up to resistance levels in the yellow zone (1.27-1.2900). On the next chart, the timeframe of H4, we have a clear signal of the breakdown of the resistance line of the downward trend of DAY and the formation of an upward trend. The support for it is the H4 line.

For a specific analysis of the entry into the transaction, go to the hourly timeframe (Figure 2). Here we have the night consolidation and the most convenient point for the entrance is of course the zone 1.2490-70.

Examples of transactions:

• conservative option:
  BUY limit 1.2480, SL 1.2440, TP 1.2540
• aggressive option (with averaging):
  BUY from the current 1.2540, SL 1.2440, TP 1.2590
  BUY limit 1.2480, SL 1.2440, TP 1.2590

I would like to place the takeprofits higher, but moderation is the way to security.

Have a good day and do not miss out the opportunity to make money! )

Andrew Green.