Canadian Dollar: USD/CAD (CAD=X) Continues to Slide

Canadian Dollar: USD/CAD (CAD=X) Continues to Slide

Canadian Dollar: USD/CAD (CAD=X) Continues to Slide

The Canadian Dollar’s rough January continues. After a promising start to the year amid a surge in crude oil prices, the acute de-escalation in US-Iranian tensions provoked a dramatic plunge across energy markets. With the Chinese coronavirus on the march (transmissibility appears to be at pandemic levels), traders are suddenly reaching for safe havens and dumping any growth-related currencies and commodities. USD/CAD rates are up by 1.58% month-to-date while CAD/JPY rates have lost -1.20%.

USD/CAD rates continue to climb amid sluggish performances across energy markets; approximately 11% of Canadian GDP is tied to the oil sector. USD/CAD rates have reached their highest level since mid-December, and continue to make their way back towards the rising trendline dating back to the 2012 low. In the last update it was noted that, “the outside engulfing bar today, suggesting further gains in the days ahead.” It still holds that USD/CAD rates likely have a near-term bullish bias as a reversal within the congestion dating back to July continues; a full-scale reversal within the sideways range would likely see USD/CAD rates to climb back towards the mid-1.3300s over the coming sessions.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.33.

The projected lower bound is: 1.31.

The projected closing price is: 1.32.

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 23 white candles and 27 black candles for a net of 4 black candles.

A bearish harami occurred (where the current small black body is contained within an unusually large white body). During an uptrend (which appears to be the case with FOREX CAD=) this pattern implies an end to the rally as the bulls appear to have exhausted themselves.

During a downtrend the bearish harami pattern is bullish as the bulls appear to be gaining strength as the bears weaken.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

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 90.4862. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 17 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 64.84. 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 15 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 155.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 15 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 13 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed down -0.000 at 1.319. Volume was 99% below average (consolidating) and Bollinger Bands were 7% wider than normal.

Open     High      Low     Close     Volume___
1.319 1.319 1.319 1.319 295
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.31 1.31 1.32
Volatility: 4 5 5
Volume: 45,273 46,125 66,534

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 0.3% below its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 4 periods.

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