Canadian Dollar: USD/CAD (CAD=X) at Tipping Point

Canadian Dollar: USD/CAD (CAD=X) at Tipping Point

Canadian Dollar: USD/CAD (CAD=X) at Tipping Point

The Canadian dollar did not participate in the broad U.S. dollar selloff overnight. Instead, it was sold due to the ongoing slide in crude oil prices, elevated expectations that the Bank of Canada will cut interest rates next week, and heightened fears that the railway blockades will negatively impact the domestic economy.

Teck Resources pulled its application for a massive new oilsands mine in Alberta. Teck complained that the lack of clarity around the Federal government’s climate-change policies made it extremely difficult to quantify the economics of the project. Ottawa is unable to provide details of its climate-change policy and its mishandling of energy projects, including pipelines, is sure to scare off foreign investment.

The railway blockades by a disgruntled minority of Indigenous people are another threat to the domestic economy. The Trudeau government is trying to negotiate a solution with several unelected “Tribal Chiefs” while ignoring the wishes of the elected Chiefs and most of the Indigenous population. The government’s timid response to the criminal actions of a few has disrupted rail and commuter traffic Canada-wide.

The Bank of Canada surprised markets on January 22 when it flipped to a dovish monetary policy outlook. It could surprise markets again, next week if it cuts the overnight rate. Speculation of such a move exacerbated Canadian dollar selling yesterday and overnight.

There are a lot of U.S. economic reports today, including Durable Goods Orders, which may distract traders from coronavirus concerns.

Technical Indicators

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 1.32.

The projected upper bound is: 1.35.

The projected lower bound is: 1.33.

The projected closing price is: 1.34.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 94.3430. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 13 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 65.93. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 13 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 197.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 4 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed down -0.001 at 1.338. Volume was 97% below average (consolidating) and Bollinger Bands were 30% narrower than normal.

Open     High      Low     Close     Volume___
1.339 1.339 1.338 1.338 1,435
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.33 1.32 1.32
Volatility: 6 5 5
Volume: 53,124 50,183 63,438

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX CAD= is currently 1.3% above its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into CAD= (mildly bullish). Our trend forecasting oscillators are currently bullish on CAD= and have had this outlook for the last 27 periods.

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