• 273 days Could Crypto Overtake Traditional Investment?
  • 277 days Americans Still Quitting Jobs At Record Pace
  • 279 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 282 days Is The Dollar Too Strong?
  • 283 days Big Tech Disappoints Investors on Earnings Calls
  • 284 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 285 days China Is Quietly Trying To Distance Itself From Russia
  • 286 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 290 days Crypto Investors Won Big In 2021
  • 290 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 291 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 293 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 293 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 297 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 297 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 297 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 300 days Are NFTs About To Take Over Gaming?
  • 300 days Europe’s Economy Is On The Brink As Putin’s War Escalates
  • 303 days What’s Causing Inflation In The United States?
  • 304 days Intel Joins Russian Exodus as Chip Shortage Digs In
  1. Home
  2. Markets
  3. Other

USDCAD Set To Resume Bear Rally

The USDCAD looks just about ready to head back up which will be the next leg of the bear rally that commenced in early May 2016. Let's check out the action using the weekly and daily charts.


USDCAD Weekly Chart

USD/CAD Weekly Chart

The horizontal line denotes the previous swing low set in October 2015 and we can see the recent low at 1.2461 breached that level thereby creating a lower low. I now believe price is tracing out a significant bear rally that still has plenty of time and price still to play out.

The Bollinger Bands show price has encountered some resistance around the middle band and has been sliding down with it over the past few weeks. I believe decision time is upon us and price will make a decision any day now to leave this middle band and head up to the upper band and beyond.

The PSAR indicator is bullish with the dots at 1.2723. This is my tight setting and these dots that represent support often act like a magnet for price and I expect the higher low to be right around the 1.2723 level. Considering it is my tight setting, it is quite possible price to stage a fake out move whereby price busts the dots before turning back up. It is really neither here nor there and today's low of 1.2732 has so far held this support.

I have drawn a Fibonacci Fan from the January 2016 high to recent low. It shows price finding resistance at the 38.2% angle and trading back down in tandem with this angle with the angle now looking more like it is providing support. I expect price to lift off this angle at any time now and surge higher.

I have added Fibonacci retracement levels of the move down and I am targeting the final bear rally high to be at least up around the 61.8% level at 1.3839. The 76.4% level at 1.4165 is also worth considering.

The RSI showed a bullish divergence at the recent low and it looks to be building strength with a pattern of higher highs and higher lows.

The MACD indicator is bullish although the averages have come back together again and that is often the exact moment when a trend resumes.

Let's now look in a bit closer with the daily chart.


USDCAD Daily Chart

USD/CAD Daily Chart

The Bollinger Bands show price now pushing into the lower band and this should act like a rubber band once price decides to bounce back up, assuming it does of course.

I have drawn a Fibonacci Fan from the low to recent high and this shows price right around support from the 76.4% angle. It is this angle where I expect the pullback low to form.

I have added Fibonacci retracement levels of the recent move up and I am looking for a low to form around support from the 61.8% level at 1.2739. Today's low of 1.2732 has marginally clipped that level so I would suggest it is alert stations for the bulls!

I have added moving averages with time periods of 100 (red) and 200 (black) and these have recently made a bearish crossover which adds support that this current move is a bear rally only.

The RSI is back in oversold territory while the MACD indicator is bearish although that is coming off a nice move up.

So, we just await a low followed by an impulsive reversal back up and I believe that will occur at any time now. One to watch!

 

Back to homepage

Leave a comment

Leave a comment