The USDCAD has been trading higher over the last 5 trading days – moving from a low of 1.1121 up to a high at the 1.1426 level in the process. Oil prices have plunged lower over the last few days and Governor Poloz was more dovish yesterday. Poloz estimated that oil may have subtracted 0.25% from GDP and that the BOC may have to provide continued monetary stimulus after excess capacity is absorbed.
Looking at the oil chart, the price fall below lower trend line (currently at 77.77) keeps the sellers in control. Stay below and the dip buyers are still feeling the pinch.
The sharp fall in oil is hurting the CAD in the process
Looking at the hourly chart of the USDCAD below, the price based near the 100 and 200 hour MA on Friday, before surging higher over the last few trading day (see blue and green lines in the chart below).
The momentum higher in trading today, has taken the price toward topside channel resistance on the hourly chart. Seller have entered and pushed the price a touch lower. The buyers remain in control above the lower channel trend line at 1.1364 but activity seems more consolidating now.
USDCAD has pushed higher but is slowing near topside trend line resistance.
Looking at the daily chart, the price has surged quite strongly over the last week of trading. The high reached today extended to the topside trend line. This line was a fairly strong line. Last month there was a break above which failed on two successive daily bars. The peak today, reestablished that line as a level to lean against.
The topside trend line on the daily chart also is tested and held.
With the trends higher, but resistance holding on both the daily and hourly charts, can we drill down and look at the 5 minute chart for clues?
The pair today is up but is experiencing choppy trading at the highs – indicative of the more uncertain environment against resistance seen on the hourly and daily charts. The correction today has so far been able to say above the 38.2-50% of the move higher today. The 100 bar MA was broken but momentum lower has slowed. Watch the 100 bar MA and the 38.2-50% retracement for shorter term bias. Stay above and the moves off the highs are just corrective/consolidative. Move below, and there may be more reasons to expect a further correction. Until then, bulls still holding the control now.
USDCAD on 5 minute is still a touch positive above the 38.2-50% retracement area
