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Canadian Dollar: USD/CAD (CAD=X) mixed forces pulling it to all directions

Canadian Dollar: USD/CAD (CAD=X) mixed forces pulling it to all directions

Bank of America Merrill Lynch Global Research discusses USD/CAD outlook and maintains a bullish bias, on the back of unsustainable Fed vs. BoC policy pricing and bullish seasonals.

“Since early last year, there have been two prior instances of relative Fed vs. BoC pricing declining below -20bp as now: May 29, 2018 and September 28, 2018. In both instances, USD/CAD resolved higher after 20 trading days for an average return of about 2% (a bit more than 3 true ranges). With a z-score of 1.0, this result looks statistically significant.

Reversion in BoC vs. Fed pricing back to flat should be worth approximately the same amount of upside in USD/CAD this time around via the interest rate channel, particularly as trade tensions have increased, not decreased. Our out-of-consensus forecast published back in February calls for USD/CAD to revisit 1.36 levels through midyear, reflecting persistent structural supply/demand flow mismatches heightened by prolonged trade policy (emphasis: USMCA) uncertainty,” BofAML notes.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.36.

The projected lower bound is: 1.33.

The projected closing price is: 1.35.

Candlesticks

A black body occurred (because prices closed lower 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 25 white candles and 25 black candles.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

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 57.2651. This is not an overbought or oversold reading. The last signal was a sell 16 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 53.76. 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 98 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 11. This is not a topping or bottoming area. The last signal was a sell 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 sell 6 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed up 0.000 at 1.346. Volume was 100% below average (consolidating) and Bollinger Bands were 64% narrower than normal.

Open High Low Close Volume___
1.346 1.346 1.344 1.346 92

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 1.35 1.34 1.32
Volatility: 5 6 7
Volume: 78,831 97,036 92,998

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 1.6% above its 200-period moving average and is in an upward 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 bullish on CAD= and have had this outlook for the last 16 periods.

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