USD/CAD Technical Analysis: 11th February 2019 – Medium Term Rally

Published by Jeremy Baker on

USD/CAD Analysis

Friday saw positive results in Canada as employment surged with an increase of 30,900 full time jobs and 36,000 part time jobs, led by the private sectors largest one-month hiring on record.

The CAD struggled with the global oil price dropping, with lower terms in trade and national income but the last few weeks has seen an upturn and CAD is beginning to show signs of life again.

Technical Analysis

With crude giving a buy signal on both the MACD and the slow stochastic on the weekly chart, it gives those that are bullish on the CAD some hope.

US Oil Weekly Chart

US Oil Weekly Chart

USD/CAD Analysis

The weekly chart for USD/CAD is showing mixed signals. It is clearly in an uptrend, as you can see in the chart below, creating higher highs and higher lows. But there are two indicators that are giving sell signals, both the MACD and slow stochastic have crossed and are pointing down. Combine this with the US Oil chart above there is an argument that we can expect to see a stronger CAD going forward.

USDCAD Weekly Chart

USDCAD Weekly Chart

I would therefore expect to see a failed high in this market. The last high was at 1.3664, therefore expectations should be for a move towards those highs but for it to fail.

Taking the analysis from the weekly chart, we should be looking for buy opportunities over the next week or so, until we see a rejection candle on the weekly, then we can argue the market is ready to sell.

USD/CAD Daily Analysis

USDCAD Daily Chart

USDCAD Daily Chart

The daily chart gives us the opposite to the weekly. The same indicators are now giving us buy signals, which does line up with the theory that this market should rally in the short-medium term.

The issue is that there has been a down trend on the daily with lower highs and lower lows. Given our weekly analysis, still I am looking to buy this market. Identifying buy zones is the next port of call. First zone I would look at is the 1.3200 level, this has shown good support and resistance in the past, any significant triggers at that level would act as a good place to buy.

Summary

As we have mentioned there are slight mixed signals on this chart but the overall strategy is clear. Long term we expect this market to sell off although that depends on whether the previous high at 1.3664 is taken. For the moment, expectations should be that this market will attempt to test those highs again.

 

 

 

Disclaimer: This should not be used as investment advice and is only an opinion. Do your own research before looking to risk your own capital in the financial markets.

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