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Canadian Dollar: USD/CAD (CAD=X) Bearish Momentum Enough to Add to Downtrend?

Canadian Dollar: USD/CAD (CAD=X) Bearish Momentum Enough to Add to Downtrend?

US Dollar weakness is expected to accelerate in 2020, and the Canadian Dollar was one of the best performers against the world’s top reserve currency. The most recent intra-day low in the USD/CAD marked a lower low, keeping the long-term downtrend intact. A recovery on the back of a short-covering rally was rejected by the bottom range of its short-term resistance zone. Global trade continues to contract, and the announcement by the US that tariffs on China will remain unchanged until after the November election will keep pressuring the supply chain.

The Force Index, a next-generation technical indicator, peaked with price action before it was pressured to the downside by its short-term resistance zone. The Force Index quickly contracted below its horizontal support level, turning it back into resistance, and below its ascending support level. This technical indicator moved above its descending resistance level, as marked by the green rectangle, but a new push to the downside is favored to take it into negative conditions and bears in charge of the USD/CAD.

This currency pair ended its uptrend after it reached the bottom range of its short-term resistance zone located between 1.31040 and 1.31382, as marked by the red rectangle. The counter-trend advance in the USD/CAD ensured the longevity of the long-term bearish chart pattern, which gathered strength for the next breakdown sequence. Price action is anticipated to be guided farther to the downside by its descending Fibonacci Retracement Fan sequence, with the 38.2 Fibonacci Retracement Fan Support Level approaching the top range of its support zone.

As the US economy continues to print economic reports suggesting a slowing economy, downside pressure on the USD/CAD will continue to increase. Forex traders are recommended to monitor the intra-day low of 1.30284, the low of a previous breakdown attempt. A move below this level is likely to result in the next wave of sell orders, adding to bearish momentum. Price action is expected to push through its support zone located between 1.29564 and 1.29988, as marked by the grey rectangle. The next support zone awaits this currency pair between 1.27818 and 1.28354, which will close two price gaps to the downside.

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 1.31.

The projected upper bound is: 1.31.

The projected lower bound is: 1.29.

The projected closing price is: 1.30.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 21 white candles and 28 black candles for a net of 7 black 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 59.2898. This is not an overbought or oversold reading. The last signal was a buy 8 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 43.19. 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 buy 6 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 50. This is not a topping or bottoming area. The last signal was a buy 6 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 4 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed down -0.001 at 1.305. Volume was 12% below average (neutral) and Bollinger Bands were 6% wider than normal.

Open     High      Low     Close     Volume___
1.306 1.308 1.303 1.305 51,848
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.30 1.32 1.32
Volatility: 3 5 5
Volume: 54,783 50,010 68,621

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 1.5% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of CAD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on CAD= and have had this outlook for the last 23 periods.

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