FOREX PRO WEEKLY #2, USD/CAD, March 05-09, 2018

[Sive Morten]

Fundamentals

So, guys, I see more interest among our forumers to cover CAD in second research.. If you've expected Gold - don't be upset, we will make daily video on Tue. Besides, All necessary analysis we've made on Fri video. Everything that we've said is still valid. Besides, gold picture strongly remains EUR, and analysis there is mostly the same...

Now on CAD.... Here some painful topics for Loonie. By recent D. Trump comments and new tariffs, it's again, a lot of talks around NAFTA (North American Free Trade Agreement) agreement. Canada is largest supplier of both basic metals to US. Previously there was already talks around NAFTA cancelling in relation to Oil supply from Canada. There are some hopes still will exist that Canada will be exception but this is not known definitely.

"Presuming the sanctions cover Canada, it hurts," said Greg Anderson, global head of foreign exchange strategy in New York. "This is a fluid situation ... there is still some chance that Canada gets exempted."
Canada sends 75 percent of its goods exports to the United States. A collapse of NAFTA could hurt its economy, which grew by an annualized 1.7 percent in the final quarter of 2017, short of economists' forecasts for 2.0 percent.

At the same time markets still expect another rate increase from Bank of Canada in July to 1.5%. Last time rate has been increased in January to 1.25%

Second topic is relation to Crude Oil prices. This is more important to us, since it could make impact on CAD in foreseeable future. Now oil is turning to bearish seasonal trend as winter is coming to an end. Based on recent CFTC report on crude oil, I prefer ICE Crude, as it shows brighter picture - net long position has dropped significantly.

Source: Reuters

This corresponds to changes on CAD:
Speculators cut bullish bets on the Canadian dollar for the third straight week, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed. As of Feb. 27, net long positions had fallen to 22,220 contracts from 23,127 a week earlier.
Indeed, if we will take a look at CAD COT chart we see that net long position is gradually dropping (left axis is reversed), not just in recent 3-4 weeks but since autumn. Investors gradually were covering longs on CAD. This also could be seen in CAD price dynamic as it rising from 1.22 lows.

Technicals

Technically, guys, CAD also is forming very cool setup, but it mostly stands on daily/weekly basis. It should give us at least two trades in different directions on different time frames. This is beyond other, smaller trades that also could be taken on intraday/daily charts...

Monthly

Monthly CAD stands in "Sell" mode, but now is bouncing up from strong monthly K-support and Agreement, as downside OP has been hit. Trend breakeven point in March by MACD stands at 1.3164. It means that until this point monthly CAD will be bearish and we could watch for chances to go short.

Weekly

Weekly CAD stands in "Buy". And forming clear AB=CD action. Market is not at Overbought, so monthly CAD either. Price already has passed through COP and stands on a road to OP. CD leg shows some acceleration which is a good sign.

OP creates super strong resistance area on weekly, which includes K-resistance and daily Overbought. Let's note for some case that XOP target also creates Agreement with major 5/8 resistance. Now we do not need it, but who knows what will happen in the future...

Now take a look again on monthly chart. As we've said - trend breakeven point stands around 1.3164, while our weekly resistance is 1.3131 It means that we could fade weekly "Buy" and try to sell from this strong weekly resistance, while monthly trend keeps bearish direction. Also it would be nice if we will have bearish grabber there...

Also price here is coming to previous consolidation around "B" point which will be natural resistance area. Previously there was 3/8 Fib level...

Daily

Now we're coming to lower time frame, and another trade that could be done. Here market also in "Buy" mode, but stands close to daily OB. Last week CAD has completed OP target here. Odds suggest that some pullback should happen. Approximately the same action we expect on other FX pairs.

As market already has passed through weekly COP and has not valuable resistance in this area, I would suggest retracement either 1.2737, or to K-support area @ 1.2630-1.2660. This retracement also will be harmonic in relation to previous one, in November, as its lows also stand around 1.2650 area.

Now, pay attention that XOP stands at 1.3154 - the same weekly support area!

So, you probably could suggest what trade could be done here. Right - as both time frames stand in "Buy" mode, we could buy from mentioned levels with 1.3155 target.

Intraday

Intraday CAD has turned to "Sell". 4-hour chart shows that we have K-support around daily 1.2737 level as well. This chart we mostly need to confirm level where we should go long. Currently it is unclear still how downside action will develop, may be H&S pattern will be formed, may be a kind of AB=CD pattern. Still, taking in consideration all facts, it seems that upside reversal will happen either from 1.2737 or 1.2650 areas. Other areas either too close or too far corresponding to overall price behavior.

Finally, scalp traders probably could try to go short, this is not forbidden of course. But, as our major trades stand on daily and weekly charts - we mostly focus on how to take long position here.

Conclusion:

So, CAD potentially could give two trades with solid potential. First trade is "Buy", as we expect either from 1.2740 or 1.2660 with 1.31-1.3150 target. Second trade is on monthly chart and it will be "Sell" from 1.31-1.3130 area.


The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.

 

[Sive Morten]

Greetings,

on CAD guys, it seems our first "buy" trade has not been formed as market continues upside action. Currently it is very probable that it goes right to daily XOP/weekly OP @1.3130 due turmoil around NAFTA, but, still, if somehow, CAD will show deep retracement prior it will reach 1.3130 - it will be buying opportunity.

Now on Gold... here we're watching for bullish setup, similar to EUR. Gold also has formed weekly bullish grabber. On daily chart major K-support stands valid and it was W&R of "B" point at the moment of OP reaching. That's why we think that upside action should continue, ultimately above previous tops. Price action on daily chart also takes the shape "222' Buy pattern...

on 4-hour chart we have some tactical questions. Thus, gold has formed upside reversal swing and met K-resistance. Both these facts suggest deep retracement. At the same time market is forming right now two side-by-side bullish grabbers. Personally I'm already in, but another opportunity to go long could be formed, if market will show this retracement to 1314 area...
Here you also could seem sequence of upside targets:

On hourly chart you can see how this retracement could happen - it's target creates Agreement support with major 5/8 Fib level. This retracement will not break daily bullish setup. It will be valid until price stands above recent 1302 lows...

 

[Sive Morten]

Good morning,

Our bullish context on gold market stands intact. Daily gold has turned to "Buy" mode. Now price stands at resistance of WPR1 and Fib level, which could trigger meaningful retracement down:

On 4-hour chart it is easy to recognize reversed H&S pattern, which suggests that retracement should be somewhere to 1323-1325 area:

Indeed, hourly chart has formed DRPO "Sell" pattern which also suggests downside retracement. As we have bullish setup on daily chart, we should wait when DRPO will work out and use this drop as opportunity to go long. Hourly chart shows K-support area around 1325, which confirms idea that 1323-1325 level should be suitable for positions taking....

 

[Sive Morten]

Greetings,
so, gold market behaves as it should to. On daily chart our "Buy" mode holds and bullish context still stands valid

Deep retracement that we've suggested yesterday has been completed. Market has dropped precisely to our 1323-1326 area, which corresponds to bottom of left shoulder of our reverse H&S pattern:

So, hourly DRPO "Sell" has worked perfect. Now, as major bottom has been completed and hourly has turned to "Buy" as well - we could try to catch minor retracement to go long against recent lows. Here we also have nice hidden bullish divergence with MACD. Right now it is rather easy to monitor and control gold market behavior. Because we have very transparent patterns. Normally, bullish market should follow it. If gold will turn down and break right shoulder bottom - this will be clear sign that something goes wrong...

 

[Sive Morten]

Greetings everybody,

Gold has broken bullish trend on daily chart and turned to "Sell" mode. It means that right now we can't just on support areas on intraday charts, but have to wait for upside trend on daily or, some bullish directional patterns.

Recent shift also could become a menace for weekly grabber, due situation that we have on 4-hour chart. In fact, gold was not able to confirm its bullish intentions and failed to proceed with our reversed H&S pattern. This is clear sign of weakness. As a rule, when H&S fails - price moves outside the head. This, in turn, could also lead to failure of weekly grabber as well.

Although right now gold stands at support - we have "sell" mode on daily and can't go long. Taking in consideration all inputs that we have, it seems that gold has more chances to proceed lower, rather than turn up right from here. Next destination point is OP around 1311, while XOP stands at 1300. XOP, by the way, totally corresponds to idea of H&S failure and erasing of weekly grabber, as it stands below recent lows on daily chart...