USD/CAD (CAD=X) Stalled Ahead of Friday Data

USD/CAD (CAD=X) Stalled Ahead of Friday Data

USD/CAD (CAD=X) Stalled Ahead of Friday Data

The Canadian dollar has traded quietly for the past two days. USD/CAD has been stuck in a $1.3111-$1.3172 range while traders bide their time until the release of the U.S. and Canadian employment reports on Friday. Canada is expected to gain 17,500 jobs, a vast improvement from the 1,000 jobs lost in May.

Arguably a weak report will have a more significant impact on USD/CAD trading than robust data. That’s because a strong report is expected and it won’t affect the Bank of Canada policy rate decision at all. However, a weak report causes some problems. It may not have any bearing on next Thursday’s Bank of Canada policy decision, but it could set the stage for another “dovish hike” scenario.

The U.S. non-farm payrolls report is forecast to rise 195,000, below the 223,000 gain seen in May. Traders will be more focused on the Average Hourly earnings component, looking for an upside surprise to the 2.88% forecast as that implies higher inflation. Weaker-than-expected data should only have a limited impact on trading because of the trade war threat.

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 1.30.

The projected upper bound is: 1.33.

The projected lower bound is: 1.29.

The projected closing price is: 1.31.

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 17 black candles for a net of 15 white candles.

An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend. It then signifies that the momentum may be shifting from the bulls to the bears.

If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with FOREX CAD=), it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.

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 8.2456. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 8 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 49.75. 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 -110.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 8 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 down -0.002 at 1.312. Volume was 43% below average (neutral) and Bollinger Bands were 14% wider than normal.

Open High Low Close Volume___
1.314 1.316 1.312 1.312 52,755

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

Moving Averages: 10-period 50-period 200-period
Close: 1.32 1.30 1.28
Volatility: 8 8 9
Volume: 85,263 89,460 81,857

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 2.8% 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 15 periods.

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