Analys från DailyFX
USD/CAD Technical Analysis: Clean Corrective Channel Above Key Support
Talking Points:
- USD/CAD Technical Strategy: Upside Remains Favored Despite Bounce Off 50% Retracement
- Oil Premium [Insert Recent Oil Article] Brings USD/CAD to 1-Week Lows In Anticipation of OPEC Meeting In Vienna
- Upside Option Premium Backs Off After Strong USD Rally
Quick Fundamental Take:
The Canadian Dollar got a boost Monday morning as Oil Producers within OPEC showed unison heading into the Vienna meeting later this month, which propelled the Oil to the highest levels this month. Most of the short-term positive data like a rate hike by the Federal Reserve is baked into the price as Bloomberg calculates the probability of a hike to 98% for the December FOMC meeting.
Access Our Free Q4 Dollar Outlook As The US Dollar Faces An Unorthodox Presidential Election
The Bank of Canada is not expected to act anytime soon, and we’ll continue to keep an eye on inflation expectations and the sovereign bond market to see how investor’s anticipate the implications of President-Trumps trade plans.
Having a Hard Time Trading USD/CAD? This May Be Why
Late November tends to provide thin trading, but over the past few years, USD/CAD has accelerated higher over December January. We’ll keep a watch on this trend to continue as the charts favor further upside above 1.3264.
Technical Focus:
D1 USDCAD: Clean Corrective Channel Within Broader Uptrend
Chart Created by Tyler Yell, CMT
The Canadian Dollar has gained on Monday morning off of significant support from last week against the US Dollar. Namely, the 50% Fibonacci Retracement of the January-May range at 1.3575. The weakness displayed in the Candian Dollar has aligned with the trend shift that we’ve been focusing on since the price broke above the Ichimoku Cloud and was followed by the momentum line. We continued to favor upside based on both the charts and fundamental story developing this week. Wednesday, U.S. Data comes in the form of Durable Goods, which are not expected to affect the priced in rate-hike for December one-way or another.
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As the price remains above the Ichimoku Cloud, the path of least resistance remains higher, and we could be paving the way for an aggressive rise as we move from a leading diagonal to an impulsive wave ‘iii’ of ‘C’ in Elliott Wave terms. The leading diagonal view is encouraged by the recent break above the pattern high at 1.3313, and the three-wave move toward a 50% retracement of the diagonal down to 1.3005.
The recent turnaround off of 1.32647 provides a base that we can look to as a foundation for advancing the uptrend. Monday’s low around 1.3387 was fought by bulls in the thin markets in a similar fashion that we saw on the Nov. 17/16 session lows.
As long as the price stays above this level, we would expect upside pressure to grow, and we’ll look to confirm the upside pressure on a break above the bearish channel drawn off the 1.3589 high on November 14. The 1.32647 level is highlighted on the chart, and price staying above this level will cause us to treat last week’s turnaround as a counter-trend move that is anticipated to reverse higher favoring further USD strength.
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The current upside target is the November 14 high near the 50% retracement of the January-May range at 1.3589. If 1.3589 breaks, we’ll be on the watch of the 61.8% retracement of the same range at 1.3838.
A few of the support levels that would need to break to change the tune from Bullish to Neutral is 1.3312, the 38.2% Fibonacci Retracement of the Jan-May range followed by Today’s low of 1.3264 that was mentioned above.
Key Short-Term Levels as of Monday, November 21, 2016
T.Y.
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What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
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You can follow Paul on Twitter at@PaulRobinonFX.
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EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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