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TECHNICAL UPDATE (IV): USD/CAD – Just dealt a key technical blow…

Updated Jan 2, 2013 6:35:00 PM By Chris Tevere, CMT

For the majority of December, USD/CAD traded within the daily Ichimoku Cloud – Initially testing cloud support near 0.9825/30 in mid-December and then making a run at cloud resistance near 0.9975 at the end of December. The failure at the highs was coincided by the daily 144 & 169 EMA’s as well as daily RSI’s rejection from the key 60/65 level. When combined, this suggests USD/CAD is still within an underlying downtrend.

Today’s break below the bottom of the daily Ichimoku Cloud around 0.9890, which rose over the past few weeks, is yet another technical blow to USD/CAD. Should we see a break below the December lows near 0.9825, then the definition of a downtrend (of lower highs and lower lows) would be affirmed. For other levels than the ones noted on Dec. 17th update (see below), as well as more insights on the USD, JPY and EUR over the coming weeks, you may want to have a look at today’s appearance on FOX Business.

Chart Source: Forex Charts by eSignal

TECHNICAL UPDATE (III): USD/CAD – Failure into the key 0.9875/85 pivot
Updated Dec 17, 2012 6:00:00 PM

In last Tuesday’s key levels & charts to watch we highlighted that “USD/CAD has taken out notable levels of support over the past few weeks, which encompassed the 50-day sma, trendline support (drawn from the 2012 low), the 38.2% retracement (using the Sept. low & Nov. high) as well as the convergence of multiple prior highs & lows in October/November. If it were to continue on this path, the bottom of the daily Ichimoku Cloud comes in around 0.9825” – See Technical Update for more.

Since this update, daily RSI has taken out the key 40 level (indicates underlying weakness) and USD/CAD went down to test the bottom of the daily Ichimoku Cloud around 0.9825. While this has continued to provide support over the past few days, the recovery failed into the key 0.9875/85 level which saw the convergence of multiple prior highs/lows as well as the 23.6% retracement of the Nov. 16 – Dec. 13 decline. Furthermore, this market failure has been coincided by a daily bearish engulfing candlestick.

Should 0.9825 break, then it may be prudent to keep an eye on:

  • 0.9735/40 – October 2012 low
  • 0.9680/90 – Trendline support (drawn from 2011 low)
  • 0.9630/35 – 2012 Low

Chart Source: Forex Charts by eSignal

TECHNICAL UPDATE (II): USD/CAD – All eyes on the key 0.9875/85 level
Updated Nov 29, 2012 5:20:00 PM

Sure enough, within 24-hours of the prior USD/CAD update the Loonie ended up testing the highlighted 0.9875-90 pivot and then rebounded significantly to break to fresh Q4 highs. However, underlying indications suggested the recent rally was running out of steam as daily RSI failed to confirm these higher highs – Thus, creating a bearish divergence. Additionally, it was faced with a convergence of the 50% retracement (of the June- September decline ), 55-week sma as well as the bottom of the weekly Ichimoku Cloud between 1.0035/45.

Presently, USD/CAD is hovering just above the 50-day sma as well as trendline support (drawn from the September low) around 0.9905/10 – Importantly, daily RSI has already broken below corresponding trendline support prior to price, which projects an ominous sign going forward. Furthermore, the 13-day sma looks poised to cross back below the daily 144 & 169 EMA’s – Should this occur, it would be yet another bearish indication.

That being said, daily RSI still resides above the 40/45 zone (key level for those bullish), but USD/CAD’s true line in the sand between bulls and bears resides around 0.9875/85, which comes just below the highlighted 38.2% retracement, as a break below this level suggests the series of higher highs and higher lows (the definition of an uptrend) is no longer intact. Such a setback could potentially send the pair back towards the October lows around 0.9730/40 initially and possibly even lead to a test of longer-term trendline support (drawn from the 2011 low) around 0.9680/90 thereafter.

Chart Source: Forex Charts by eSignal

TECHNICAL UPDATE (I): USD/CAD – Facing stiff resistance into parity…
Updated Nov 6, 2012 8:15:00 PM

After testing briefly above parity, USD/CAD has begun to turn back lower once again. So now the question becomes is the Loonie likely to continue to remain firm or is this merely correction?

Here are the USD/CAD “technical” facts:

  • Daily RSI failed near the key 65 level (bearish)
  • Failed to maintain above the 200-day sma
  • Appears to be an Elliot Wave A-B-C correction
  • Back below the 38.2% retracement
  • 13-day sma is testing daily 144 & 169 EMA’s, but with price below this should move lower again
  • Daily RSI has broken below corresponding trendline support in advance to price (leading indication?)

That said, the real decision between bulls & bears will come down to price action itself and the two key levels to watch are 0.9875-90 (convergence of prior highs & lows) and 0.9835 (trendline support).

Chart Source: Forex Charts by eSignal

TECHNICAL UPDATE: USD/CAD – Facing stiff resistance into parity…
Updated Oct 22, 2012 6:15:00 PM

Considering the Bank of Canada is has an interest rate announcement tomorrow morning (9am ET), I felt it was pertinent to highlight some of USD/CAD’s major technical levels – Expectations are for the BoC to keep rates on hold at 1%. While daily RSI remains well below the key 60/65 level, it suggests participants may look to fade any further potential rallies.

Key technical levels to watch:

  • 0.9940/45 – Top of the daily Ichimoku Cloud
  • 0.9945/50 – August 23rd high
  • 0.9945/50 – 38.2% retracement (using the June high & September low)
  • 0.9955/65 – Daily 144 & 169 EMA’s, with the 13-day sma below (bearish)
  • 1.0000 – Convergence of the 100 & 200-day sma’s

On the other hand, if crude oil continues to decline – As noted in Friday’s TECHNICAL UPDATE, then the Canadian dollar is likely to remain weak (since Canada is a major exporter of oil) and thus a higher USD/CAD. As for US Oil (WTI)1, it broke below the 100-day sma around $90.05 earlier today and could be poised for a test of the October low near $87.75 over the coming sessions. Accordingly, should this level give way then look for USD/CAD to break north of parity.

1 Reference is for informational purposes only and is not offered to US clients

Chart Source: Forex Charts by eSignal

Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

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