The Canadian Dollar and the price of Crude Oil per barrel are very closely related. USDCAD is weakened (strong CAD) whenever we see OIL prices rise and vice versa. Recently we have seen Oil prices break below 42$ to just above 40$ but USDCAD could not push above 1.3380. I would expect USDCAD to be trading near 1.34 or higher but instead prices are captured inside a bearish wedge formation.
USDCAD is trading above the Ichimoku cloud support but resistance at the 78.6% Fibonacci retracement remains still too strong to be broken. Price is above the important support trend line at 1.32 but despite the new short-term higher high the stochastic oscillator is providing a lower high, thus a bearish divergence.
Oil remains in a clear bearish trend inside a bearish channel below the Ichimoku cloud resistance. Stochastic oscillators are very oversold in both the 4 hour and daily chart.
The Stochastic oscillator has reached price levels in the daily chart that signal a bounce will come soon. The bounce is at least expected to test the daily Ichimoku cloud at 44$ with many chances of a bigger upward bounce if we take into account that Oil prices could have finished 5 waves down from 113$ in August 2013. My focus now is on waiting for the next big move in these two products and will wait patiently for the reversal signals. My analysis tells me this is not the level to be long USDCAD or short OIL. My analysis tells me to be ready for a reversal. Trading2day subscribers will receive my trades through SMS in their mobile phones and will be alerted in real-time when I place the orders or when I open the positions.
As always, thank you for taking the time to read my latest post.
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.