Canadian Dollar: USD/CAD (CAD=X) Undermined by Risk Aversion

Canadian Dollar: USD/CAD (CAD=X) Undermined by Risk Aversion

Canadian Dollar: USD/CAD (CAD=X) Undermined by Risk Aversion

The Canadian dollar continued to sink overnight, weighed down by ongoing risk-aversion sentiment. The Wuhan coronavirus has claimed 170 lives as of January 30, a 28% increase from the day before. The number of confirmed cases sits at 7,711. World leaders are getting nervous. The Philippines and India announced their first coronavirus cases and Russia closed its borders with China. The World Health Organization is holding another meeting today to discuss if this outbreak warrants classification as a Global Health Emergency.

The coronavirus outbreak reverted to be the leading market focus after Wednesday’s Federal Open Market Committee meeting delivered as expected. The FOMC left interest rates and policy unchanged, which was universally expected. Policymakers tweaked the statement wording just enough to suggest the Fed was slightly dovish. The U.S. dollar drifted lower on the news but not against the Canadian dollar. The loonie traded lower on the back of sharply lower oil prices.

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 white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.

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.

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 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 82.4562. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 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 64.09. 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 18 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 104.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 18 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 16 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed down -0.000 at 1.321. Volume was 97% below average (consolidating) and Bollinger Bands were 18% wider than normal.

Open     High      Low     Close     Volume___
1.321 1.321 1.320 1.321 1,877
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: 46,847 46,188 66,008

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 0.1% below its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods. 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 7 periods.

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