Market Optimism Lifts The Canadian Dollar: USD/CAD (CAD=X)

Market Optimism Lifts The Canadian Dollar: USD/CAD (CAD=X)

Market Optimism Lifts The Canadian Dollar: USD/CAD (CAD=X)

USD/CAD breached the 1.4330 support level and quickly moved closer to the 1.4000, supported by broad U.S. dollar weakness. The U.S. Dollar Index corrected from 104 to 100 in a matter of several days, so many currencies have experienced material upside against the U.S. dollar.

Many asset classes are in rally mode today despite the negative surprise from the U.S. Initial Jobless Claims data, which showed that 3.3. million Americans applied for unemployment benefits.

The Canadian dollar is a major beneficiary of this renewed optimism and rallies despite continued weakness on the oil price front. At this point, oil is one of the major potential downside catalysts for the Canadian dollar since oil failed to show upside at times of widespread market optimism, highlighting its underlying weakness.

It remains to be seen how long the current market optimism will last since the upcoming economic data is set to be even worse than today’s Initial Jobless Claims since the U.S. has only recently implemented serious coronavirus containment measures.

The potential pause in the current market rally is another risk for the Canadian dollar which clearly benefits from the risk-on mode in the markets.

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: 1.43.

The projected lower bound is: 1.37.

The projected closing price is: 1.40.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 32 white candles and 18 black candles for a net of 14 white candles.

A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

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 4.2683. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 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 55.17. 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 2 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 -30. This is not a topping or bottoming area. The last signal was a sell 3 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 1 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed down -0.000 at 1.401. Volume was 56% below average (consolidating) and Bollinger Bands were 300% wider than normal.

Open     High      Low     Close     Volume___
1.402 1.407 1.399 1.401 28,197
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.43 1.35 1.33
Volatility: 24 13 8
Volume: 113,473 77,580 66,632

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 5.6% 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 47 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.

The following two tabs change content below.
HEFFX has become one of Asia’s leading financial services companies with interests in Publishing, Private Equity, Capital Markets, Mining, Retail, Transport and Agriculture that span every continent of the world. Our clearing partners have unprecedented experience in Equities, Options, Forex and Commodities brokering, banking, physical metals dealing, floor brokering and trading.