Sive Morten
Special Consultant to the FPA
- Messages
- 18,527
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.
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.