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  • USD/CAD: Weekly Update 9 comments
    Jul 2, 2010 9:50 PM | about stocks: FXC

    Long term chart: here
    Last daily update: here

    USD/CAD Weekly

    Weekly Status

    - Second weekly close up after making weekly 'Bullish Engulfing' pattern, it confirms a higher low after making the bottom. This setup is a strong buy signal.
    -I am projecting a large channel, which is divided by the middle line, which is again divided in half by the small dotted line, under which we are located with today's close. The middle line should be broken upwards and at the middle line of the major channel (blue dotted line) we should do a weekly correction before going higher.
    - I have labeled the Elliot Wave count, we are likely to be in a major 3rd wave right now. It is estimated to be triple the size of the first wave

    Disclosure: Long USD/CAD

    Stocks: FXC
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Comments (9)
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    , contributor
    Comments (664) | Send Message
    Author’s reply » we have got a downday today, so the whole week could be lost (and the projection would need to be replanified) if tomorrow we don't close higher than today's opening.
    6 Jul 2010, 07:51 PM Reply Like
    , contributor
    Comments (664) | Send Message
    Author’s reply » this market is very challenging. if we break below the last week opening (1.0350 ) we have to go test the bottom again. but this shouldn't happen, since the long term trend is up.
    8 Jul 2010, 10:45 AM Reply Like
    , contributor
    Comments (664) | Send Message
    Author’s reply » we closed the week below support 1.0350, but it is an outside week (we did new high and new low) so we don't have a toppy pattern (unless we make new low next week) We are also within the monthly uptrend.
    The dollar index could be aligned for a new wave up like i review here:
    so, if the dollar goes up as expected, this count with week number of how much to trade per week (and stop for a trading range in in the middle of the channel) is not going to happen. What is likely to happen, and considering how volatile USD/CAD is, is that it would go straight up to 1.2200 finishing the move by the end of August, and from that point retrace to the mid-channel line which would be at 1.15000 by that time.
    That would be from current 1.0340 about 1800 pips.
    9 Jul 2010, 10:28 PM Reply Like
    , contributor
    Comments (664) | Send Message
    Author’s reply » It seems that we had a correction which retraced 76.4% It doesn't look like an ABC type though.
    The trend now reversed on the weekly, and i am expecting it to continue into late august. The target hasn't changed.
    16 Jul 2010, 01:10 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (3964) | Send Message


    Your charts are great, but seemingly you often omitted the fundamentals. Why would you be so bearish on the Canadian Dollar given the fact that:


    1) The Bank of Canada would likely raise interest rate another 0.25 points to 0.75 versus near 0 for the U.S.
    2) Canada has a much smaller national debt and current federal deficit compared with the U.S. About one third adjusted for GDP size. So their interest payment is much less on those debts.
    3) One of the key drivers for trading the Canadian Dollar is the price of oil. I don't see an immediate or even an intermediate drop of the price of oil much below $70/barrel.


    Care to comment? What is the basis of your take?


    16 Jul 2010, 02:44 PM Reply Like
    , contributor
    Comments (664) | Send Message
    Author’s reply » no, i actually consider fundamentals in the charts. the fundamentals are deflationary. Canadian dollar depends on commodity exports and commodities began a long term downtrend partly influenced by secular bull market in the dollar and on the other part by low global demand (see recent downtrend on $BDI). Fundamentally CAD will be affected in exports and this will reflect on its GDP and the long term the trend should be down. Basically this is how i chart it, fundamentals represent a long term goal, and technicals are the road you take to get to the goal, which is never straight up, but it must reach the goal at the end.
    Now if BoC will rise interests and if this will affect CAD i really don't think the rise to 0.75 (if happens) will really increase buying in Canadian dollar. Because we had Australian dollar at 4.50% and we saw it trading the same way in 2008 (first deflation wave) as Canadian dollar did. Mexican peso with its 6% interest rates also lost in 2008. These facts make me think interest rates aren't going to influence much the trading on these commodity currencies.
    And I actually consider that CAD trades mostly against oil, and oil in my current count is headed to 55. Oil's downtrend mostly will be due to the rising dollar. And the dollar is headed to around 97 , fundamentals behind are continuation of the downtrend on the EURO which is the biggest part in USD dollar index. I think Canadian dollar is in divergence (fundamental and technical) with the Euro right now. As US, Europe and Japan represent about 80% of world's GDP, all the commodity exporting countries will suffer from deflation in these big economies. Technically we have well marked bearish long term charts (monthlies) , so, everything in my charts is tied together to trade long term deflation trend, deflation it is a global process where every country is involved and i think nobody will escape from it. This is basically how i do my charts
    16 Jul 2010, 03:37 PM Reply Like
  • Teutonic Knight
    , contributor
    Comments (3964) | Send Message
    Good, short TIP or TIPS now!
    16 Jul 2010, 03:52 PM Reply Like
  • jmcaule
    , contributor
    Comments (22) | Send Message
    Deflation, look it up.
    16 Jul 2010, 03:57 PM Reply Like
    , contributor
    Comments (664) | Send Message
    Author’s reply » i think the delay we had for this projection to work is coming to the end. we have a triangle continuation on the daily and lower lows on the weekly, so market is going to explode to the upside some time soon. we could start tomorrow or early next week.
    Targets/channels haven't been changed so far.
    22 Jul 2010, 03:01 PM Reply Like
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