Weak Oil Continues To Put Pressure On The Canadian DollarCanadian Dollar: USD/CAD (CAD=X)

Weak Oil Continues To Put Pressure On The Canadian DollarCanadian Dollar: USD/CAD (CAD=X)

Weak Oil Continues To Put Pressure On The Canadian DollarCanadian Dollar: USD/CAD (CAD=X)

USD/CAD continues its attempts to settle above 1.4500 and maintain the upside trend despite the broad-based weakness in the U.S. dollar. The U.S Dollar Index has left the 103 – 104 area and is currently located near the 102 level due to risk-on sentiment in most markets.

The expectations of a massive U.S. coronavirus aid package together with the previously announced unlimited quantitative easing ensure the flow of funds into riskier assets and lead to U.S. dollar weakness.

However, the Canadian dollar is heavily dependent on oil price dynamics, and oil fails to gain ground due to concerns about future oil demand.

Today, the markets had a chance to evaluate U.S. Flash PMI and New Home Sales numbers. The Manufacturing PMI Flash came at 49.2, just below the previous reading at 50.7.

However, the Services PMI Flash was down to 39.1 from the previous reading of 49.4, highlighting the blow to the services sector dealt by virus containment measures.

New Home Sales were also not inspiring, showing a 4.4% contraction. In general, investors and traders will have to get used to disappointing data since it is unlikely that any improvements will be reported in the following few weeks.

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: 1.46.

The projected lower bound is: 1.41.

The projected closing price is: 1.44.

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 34 white candles and 16 black candles for a net of 18 white candles.

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 60.5263. This is not an overbought or oversold reading. The last signal was a sell 3 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 70.53. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 31 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 67. This is not a topping or bottoming area. The last signal was a sell 1 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 19 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed down -0.010 at 1.436. Volume was 46% below average (neutral) and Bollinger Bands were 372% wider than normal.

Open     High      Low     Close     Volume___
1.446 1.448 1.435 1.436 33,504
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.43 1.35 1.33
Volatility: 20 11 7
Volume: 112,523 74,298 66,241

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 8.3% 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 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 45 periods. Our momentum oscillator is currently indicating that CAD= is currently in an overbought condition.

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