Canadian Dollar: USD/CAD (CAD=X) continues to experience major volatility

Canadian Dollar: USD/CAD (CAD=X) continues to experience major volatility

Canadian Dollar: USD/CAD (CAD=X) continues to experience major volatility

USD/CAD continues to experience major volatility. The pair managed to settle above the resistance level at 1.4150, which opened the path to the test of the resistance level at 1.4330.

However, a surprisingly good release of the Chicago PMI for March (47.8 vs consensus of 40) led to a decline of the U.S. dollar against a broad basket of currencies. The U.S. Dollar Index, which has previously tried to gain ground above the 100 level, has corrected closer to 99.

Another help for the Canadian dollar came from the oil front as oil gained ground on hopes about possible U.S. – Russia production cut talks. I remain skeptical that any such deal is possible in the near term, but the momentum upside in oil is certainly providing support for the Canadian currency.

Meanwhile, the U.S., which has just passed the $2 trillion coronavirus aid package, is already looking at the fourth part of the economic aid.

U.S. President Donald Trump has recently twitted that it was time to use the zero interest rates to get the long-awaited infrastructure bill and suggested that it could total $2 trillion.

Any additional coronavirus aid package will lead to more money-printing and is theoretically bearish for the U.S. dollar. However, the markets remain shocked by the current crisis, so the U.S. dollar could maintain its position as a safe haven asset of last resort.

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 1.37.

The projected upper bound is: 1.44.

The projected lower bound is: 1.38.

The projected closing price is: 1.41.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 32 white candles and 18 black candles for a net of 14 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 36.0696. This is not an overbought or oversold reading. The last signal was a buy 1 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 56.79. 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 5 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 -42. This is not a topping or bottoming area. The last signal was a sell 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 sell 4 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed up 0.005 at 1.411. Volume was 49% below average (consolidating)(neutral) and Bollinger Bands were 195% wider than normal.

Open     High      Low     Close     Volume___
1.406 1.412 1.406 1.411 33,601
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.42 1.36 1.33
Volatility: 18 14 8
Volume: 120,699 82,784 67,500

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 6.2% 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 volume flowing into and out of CAD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on CAD= and have had this outlook for the last 50 periods.

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