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  • USD/CAD: 14 Years Price-Action In A Nutshell – Is A Near-Term Bottom In Place?

    Is A Near-Term Bottom In Place For USD/CAD?

    USD/CAD had dipped to 1.0620 and seems to be finding some support since then. The price-action during past 6 days has been failing to dip below 1.0600 to enter the psychological ranges of 1.0500. Let's see what else has been going with the currency pair and what can we expect during the coming days.

    USD/CAD daily chart

    (click to enlarge)

    Past 22 months' price-action of USD/CAD has seen a support trend-line emerging. The recent fall has touched that trend-line again and hence a short-term or possibly even a near-term bottoming can not be rules out. If this support continues then we can see the pair to see some gains in the coming days. Please check the following weekly chart with the support trend-line since early September 2012:

    (click to enlarge)

    Well, the support of the trend-line does not seem to be alone in the making. This support coincided with the support of the lower edge of the weekly Ichimoku cloud. Do check the following USD/CAD weekly chart with Ichimoku cloud:

    (click to enlarge)

    The previous bottom for USD/CAD was at 0.9405. The upward move since then had taken the currency pair to 1.1278. The recent move to 1.0620 has not really completed the 38.2% Fibonacci retracement as that level is 1.0562. However, the recent moves may be considered almost as the completion of that retracement as the difference is just 58 pips.

    USD/CAD almost completes 38.2% retracement

    (click to enlarge)

    Even if the trend-line resistance fails, a very strong support can be expected slightly below it, near 1.0562. This is not just because of the support of the retracement level but because of the psychological support of 1.0500 ranges.

    While we are on it, let's also have a look on the overall historical price-action of USD/CAD.

    (click to enlarge)

    As the above monthly chart shows, during the first week of February 2002, USD/CAD had hit a high of 1.6193. From there a long-term downtrend had started, which had taken the currency pair to as low as 0.9056 on November 1st, 2007. The recovery from this low had completed the 38.2% retracement but had missed the 50% retracement by going half way towards it. Practically speaking, the moves beyond the 38.2% retracement were very short-lived. The pair had then fell from 1.3063 to 0.9406. The fall was rather sharp but support had come well before a retest of the previous low of 0.9056. The subsequent move had completed the 38.2% retracement of this second leg of the fall. A resistance near the 38.2% level was well expected and that resistance saw the recent leg of downward moves.

    What to expect?

    The support of 0.9406, which was well over the previous 0.9056 suggests that a bottom may already be in place at 0.9056. The lows have been continuously getting higher and on the other hand recently the price-action had tried to break above the high of past almost 5 years.

    (click to enlarge)

    The high for USD/CAD during August 2009 was 1.1124 and after almost 5 years the pair tried to break above it repeatedly to touch 1.1278. Yes, we can say that the gains could not sustain, but it was a break of that resistance nevertheless.

    Considering all these facts, we remain in favor of upside for USD/CAD technically and at least for near-term. As mentioned above that even if some further downward moves take place, another support should be seen very soon and in 1.5400 to 1.5580 region.

    Now, lets take a look on some other charts as well, mainly different time-frames of Ichimoku cloud as we have covered other things more or less.

    USD/CAD with monthly Ichimoku cloud

    (click to enlarge)

    The above monthly Ichimoku cloud chart shows that the previous attempt of recovery had failed below the upper edge of the daily Ichimoku cloud, when the price had gone as high as 1.3063 and had fallen strongly to 0.9406. However the recent gains had at-least tried to break above the could. The movement could not sustain but for 3 months there was an attempt of breaking over. The monthly candle is still well above the support level of Kijun line, while the Tenkan line stays well above the kijun line, bullishly. The Kijun-line support is at 1.0495 but we would expect a support well above that, as mentioned above.

    USD/CAD with the daily Ichimoku cloud

    (click to enlarge)

    The above USD/CAD daily Ichimoku cloud chart shows that the currency pair has broken out of the resistance of Tenkan-line, first time, after a month. The current price is again at Tenkan-line level and a support here is expected. Combine this support with the above mentioned support of the mentioned trend-line and we get a feeling for the possible outlook for USD/CAD.

    ForexAbode.com brings professional tips to individual Forex traders with up-to-date market updates, analysis and free education.

    Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: USD/CAD
    Jul 10 7:49 PM | Link | Comment!
  • Daily Currencies Outlook By "Forex Abode"

    Forex Abode: Today's Forex Daily Outlook of currency pairs in focus.

    USD/JPY

    USD/JPY moved up strongly to touch 104.69. ForexAbode's analysts remain in favor of further gains however the immediate outlook stays neutral till there is a break over 104.92 but more specifically 105.00. In case such a move takes place then the pair should retest the resistance zone of 105.35 to 105.44 resistance zone. However, this outlook will change if USD/JPY breaks below 103.83 which is 3 pips below the recent support. Even if such a move takes place the next support will be expected at or above 103.57 but any decisive failure of that support will turn the focus back for the retest of 102.85.

    EUR/USD

    EUR/USD's recent support at 1.3507 indicates the following:

    • The recovery came well ahead of retesting the low (1.3490) of the hammer styled daily candle of November 25, 2013.
    • 1.3500 psychological level held.
    • The short-term support trend-line as shown in the daily chart above also seems to be holding.
    • The support was also slightly over the 200-day moving average which indicated that the recent trend of support is holding.

    EURUSD over 200 day moving average

    Considering all the above points, "Forex Abode" analysts expect further gains towards 1.3600 where the resistance Tenkan line of the daily Ichimoku cloud may act and also the pull of 1.3500 level may come into the picture. On the upside if there is a decisive break of 1.3605 then further gains towards the resistance zone of 1.3640 to 1.3650 will be expected. The focus will turn towards downside only if the price-action overcomes the psychological support of 1.3500 by falling below 1.3490. Today's ZEW surveys for economic sentiments from Germany and European Monetary Unions may also act as the driver for the short-term direction

    USD/CAD

    USD/CAD has been in a volatile sideways mode for past 5 trading days. Overall sentiments and outlook stays bullish but till the resistance of 1.1000 is not overcome we stay neutral for upside. More specifically a break out on either side i.e. below 1.0905 or above 1.0991 is required to determine the short-term direction. An upside breakout should target 1.1050 next, however if the support at 1.0905 fails then further consolidation towards the next support zone of 1.0842 to 1.0860 will be expected. The immediate outlook will turn towards bearish side for some deeper consolidations only if a decisive break below 1.0842 but more importantly 1.0823 takes place.

    CAD/JPY

    CAD/JPY remains in a sideways mode for past 8 trading days after the recovery attempt failed at 95.90. If the resistance at 95.90 holds then the possibilities of deeper consolidations can not be ruled out but the break of 94.58 support is required as confirmation. CAD/JPY's recent moves presented an excellent example of number psychology. The pair was in a strong uptrend but faced an equally strong resistance before hitting the major psychological level of 100.00. The sharp fall broke the psychological support of 95.00 but marginally. The recent price action after the recovery from 94.58 is indicating that the psychological support of 95.00 is also in place. In case there is no decisive break of 94.58, but more importantly 94.00, then some extended sideways moves can be expected. We stay neutral for CAD/JPY from short-term perspective.

    GBP/USD

    GBP/USD maintains the overall bullish sentiments. However the drastic drop in the volatility and the continuous resistance of 1.6500 key psychological level are keeping us neutral for the pair, as far as the immediate outlook is concerned. To turn the focus back towards upside, the failure of 1.6464 resistance but more importantly a break of a.6517 resistance is crucial. In case such a move takes place then GBP/USD should target a retest of 1.6603 next. However if these resistances hold and the support of 1.6309 fails then the focus will turn back towards downside for 1.6217 or below.

    EUR/GBP

    EUR/GBP has not only gone into a sideways range but the volatility has gone down drastically. The overall outlook stays bearish but some upward consolidation cannot be ruled out. On the upside the first resistance is expected in the range of 0.8330 to 0..8348. This range not only represents the recent resistance but also the 55-day EMA resistance. Even if this resistance fails we expect any upward consolidation to be limited to 0.8392 to bring another drop. On the downside a break below 0.8230 but more specifically 0.8220 is required to continue the ongoing fall to target 0.8180 or more.

    EUR/AUD

    EUR/AUD's strong recovery from 1.5030 i.e. well ahead of the psychological a.5000 level stalled after a brief break of 1.5500. "Forex Abode" analysts remain in the favor of further gains as long as the price-action stays above 1.5280. However a break above 1.5508 is critical to maintain this outlook. If such a break takes place then EUR/AUD should target the resistance zone of 1.5557 to 1.5597. However if this resistance holds and the expected support at 1.5280 fails then the focus will turn back towards 1.5030 or below. Our immediate outlook stays neutral.

    USD/INR

    USD/INR remains in a narrow sideways range between 61.07 and 61.71 after failing below the resistance zone of 62.44/62.50. The price -action is clearly showing the psychological support of 60.00 ranges and a fear of entering that range by breaking below 61.00. Overall, as we have been mentioning is some of the previous updates, we expect some deeper consolidations in the days to come but our immediate outlook stays neutral for USD/INR.

    Check previous entries of FxDailyDose (The short URL, for your convenience, is http://bit.ly/FXDailyDose).

    You may also check the daily and weekly analysis for 8 currency pairs on the following pages:

    Daily Analysis:
    1. EUR/USD daily analysis
    2. USD/JPY daily analysis
    3. GBP/USD daily analysis
    4. USD/CHF daily analysis
    5. AUD/USD daily analysis
    6. EUR/JPY daily analysis
    7. GBP/JPY daily analysis
    8. AUD/JPY daily analysis
    Weekly Forex Outlook
    1. EUR/USD outlook
    2. USD/JPY outlook
    3. GBP/USD outlook
    4. USD/CHF outlook
    5. AUD/USD outlook
    6. EUR/JPY outlook
    7. GBP/JPY outlook
    8. AUD/JPY outlook

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jan 21 6:47 AM | Link | Comment!
  • Changes In Currency Correlations - Week Of January 6th 2014

    An eye on any sudden changes in the correlation values is always important as it may provide a trading opportunity. The reason is simple that temporary major changes in the correlations may ultimately try to normalize to their longer-term averages.

    Let's check the EUR/USD correlations with some of the other pairs. The following data compares last week's average against past one year's average.

    EUR/USD correlation table

    (click to enlarge)

    (click to enlarge)

    The major changes are seen in the correlation of the following pairs:

    • EUR/USD with AUD/USD. The last one year's data shows negative correlation of -0.38 while during past one week these two pairs went into a strong positive correlation of +0.97.
    • EUR/USD with EUR/GBP: These two pairs again changed the direction from last one year's average negative correlation of -0.26 to positive correlation of +0.62 during last week.
    • EUR/USD with EUR/CHF: The direction changed from past one year's weak positive correlation of +0.24 to slightly stronger negative -0.59 during the last week.
    • EUR/USD and USD/JPY: The similar changes took place between EUR/USD and USD/JPY where a change from a week correlation of -0.37 to a stronger positive correlation of +0.72 was seen.

    What did not change?

    USD/CHF held it's strong opposition to EUR/USD with almost no change in the position. The very strong correlation between these pairs saw a minor change of -0.94 to -0.91.

    You may check more about correlation of currency pairs here.

    Connect with the author at Google: +Himanshu Jain.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Jan 11 11:47 PM | Link | Comment!
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