Canadian Dollar: USD/CAD (CAD=X) breakout yet to gain a full head of steam
USD/CAD broke out last week above a key long-term threshold in the form of the 2016 trend-line, and is pressing on staying above the September high at 13382. The big-picture (weekly) chart has a solidly bullish tilt to it. It’s getting the ball rolling that is taking some time.
USD/CAD 3-month implied volatility is at 5.25, which is well below half of what it used to be back during 2016. By comparison to other currencies, even the euro which had been extremely sluggish has an implied vol approaching 7. The lag isn’t seen as lasting long, and with where price is situated it might not be long before we see a much larger move develop.
The channel off the December 31 low is helping keep the intermediate-term pointed higher. Levels to watch on further strength in the week ahead will be the May high at 13565, which is in confluence with a trend-line from May 2017. This might act as a ceiling temporarily, but if we are to see USD/CAD finally get going it might not last long.
Undermining the breakout will require a move back below the 2016 trend-line down near 13200. In the event this happens, then the breakout may have been false and perhaps the volatility expansion will come on the downside. At this time that is seen as a low probability scenario.
Overall, the bias in prices is: Upwards.
By the way, prices are vulnerable to a correction towards 1.32.
The projected upper bound is: 1.37.
The projected lower bound is: 1.35.
The projected closing price is: 1.36.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 33 white candles and 17 black candles for a net of 16 white candles.
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 83.1193. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 5 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 74.77. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 19 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 182.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 1 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 7 period(s) ago.
Rex Takasugi – TD Profile
FOREX CAD= closed up 0.014 at 1.356. Volume was 95% below average (consolidating) and Bollinger Bands were 43% wider than normal.
Open High Low Close Volume___
1.346 1.358 1.346 1.356 2,833
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.34 1.32 1.32
Volatility: 8 5 5
Volume: 78,916 57,022 63,592
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.
FOREX CAD= gapped up today (bullish) on light volume. Possibility of a Common Gap which usually coincides with a lack of interest in the security. Common Gaps are fairly irrelevent for forecasting purposes. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
FOREX CAD= is currently 2.7% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 33 periods. Our momentum oscillator is currently indicating that CAD= is currently in an overbought condition.