Sive Morten
Special Consultant to the FPA
- Messages
- 18,771
Guys, today I've decided to take a look at CAD, instead of Gold, since Gold mostly stands at the same area and major part of our analysis that we've made last week still stands the same.
At the same time, CAD right now shows very interesting picture. It has completed butterfly "Sell" pattern, that we've talked about last time and it could happen so, that CAD stands at significant changes....
COT Report
On Canadian dollar recent CFTC data shows interesting picture. Although position amount has contracted significantly during last year, almost for 4 times, recent changes in open interst and speculative positions shows moderate bullish behavior. Last week speculative short position has decreased, while open interest increased. It tells that new short positions have been taken on the market. As you can see CAD mostly was dropping recently, as well as crude oil. In general, recent drop on CAD for ~ 6 months, was accompanied by decrease in open interest and mostly looks like retracement, at least currently.
Technicals
Monthly
Here guys, we will take a look at CAD, but also at Crude Oil chart, because situation there is tricky. Here is monthly CAD. Those of you who follows our researches should remember it. After CAD has completed large AB=CD pattern, we've said that downward retracement should happen right to monthly K-area. As it was done, CAD has turned back to upward action (mean USD/CAD). Monthly chart tells that next AB-CD target stands around 1.56 area and YPR1:
But what chances that this upward action will continue? Recently there are more and more talks about crude oil, and that it could return back to former lows, or even lower. Theoretically, guys, if we will not be confused by numbers that they are too small, technical picture tells that this is possible.
Take a look at monthly chart of crude, we have also large AB=CD that has 100% extension around 18$ level. The pattern that could lead market to this level - 1.618 3-Drive "Buy":
Currently it looks amazing, but technically we can't say that this is impossible, just imagine that this is not a crude oil and you do not see price scale. You will find nothing curious with this picture.
That's being said, this is major intrigue right now here - whether this setup will start or not...
Weekly
This chart looks not quite supportive to idea of action right to 1.56 level. Actually it shows opposite picture. Story has started right from strong drop down from the top. This was a bearish reversal swing and is has exceeded previous swing up. Then even more - upside action has taken a clear shape of AB=CD retracement. Price behavior was gradual and smooth, no real upside acceleration, a lot of overlapping candles, AB and CD legs have the same speed. Combining this action with initial thrust down, actually we have here "222" Sell pattern.
Besides, upside action now meets resistance of 50% Fib level and MPR1:
But on a Crude oil weekly chart does not look as cloudless as on CAD. Take a look, here we have some kind of reverse H&S pattern, and the same AB-CD retracement was in opposite direction compares to CAD.
Crude has not broken neckline and dropped down. This is not good sign, besides, CFTC data tells that last changes stand not in favor of CAD.
This leads us to very important conclusion. Real key to solution is 40$ level on Crude oil (shoulders' bottom) and 1.36 level on CAD. Because, if CAD will break it up - it will move above MPR1, destroy the harmony of "222" and AB-CD pattern and this will be irrational behavior for bearish market. This will tell that new trend is coming.
Daily
This time frame even increases importancy of current resistance on CAD. Price has completed our Butterfly "Sell" pattern that we've talked about in last videos on CAD. Butterfly is reversal pattern that also supports ideas on weekly chart that CAD should drop as normal bearish market should. Also this is upper border of the channel.
That's why if somehow butterfly will fail and CAD will jump higher - this will increase effect of breakout. Butterflies fail very rare, but if this happens, usually they fail miserably.
Currently this reversal is also supported by crude oil DRPO "Buy" pattern:
Intraday
On hourly chart of CAD we do not see something really special. You probably could recognize wide shape of H&S pattern, but it is not perfect. Most important here is existing of WPR1 right around previous top. This level finalizes importancy of 1.36 resistance level. It includes weekly 50% Fib level, AB-CD target, MPR1 and WPR1, daily butterfly "Sell". This is enough to make normal bearish market drop out from it and continue trend down. If this will not happen - this could bring great upside impulse to CAD and downside to Crude that will lead both price to dramatical levels:
Conclusion:
Currently situation looks cloudless for CAD, but recent price action on Crude oil, especially on weekly chart, that we treat as irrational a bit, could turn everything from top to bottom. CAD now stands at the edge that separates bearish market from dramatic upside action. So, 1.36 level could become very imporant turning point on CAD.
That's being said, on coming week we will take a close look at it. If CAD will break it up, this could open road to 1.55 area in long-term perspective and lead crude oil prices back to 18$ per barrel. Now it looks unbelievable, but who knows....
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.
At the same time, CAD right now shows very interesting picture. It has completed butterfly "Sell" pattern, that we've talked about last time and it could happen so, that CAD stands at significant changes....
COT Report
On Canadian dollar recent CFTC data shows interesting picture. Although position amount has contracted significantly during last year, almost for 4 times, recent changes in open interst and speculative positions shows moderate bullish behavior. Last week speculative short position has decreased, while open interest increased. It tells that new short positions have been taken on the market. As you can see CAD mostly was dropping recently, as well as crude oil. In general, recent drop on CAD for ~ 6 months, was accompanied by decrease in open interest and mostly looks like retracement, at least currently.
Technicals
Monthly
Here guys, we will take a look at CAD, but also at Crude Oil chart, because situation there is tricky. Here is monthly CAD. Those of you who follows our researches should remember it. After CAD has completed large AB=CD pattern, we've said that downward retracement should happen right to monthly K-area. As it was done, CAD has turned back to upward action (mean USD/CAD). Monthly chart tells that next AB-CD target stands around 1.56 area and YPR1:
But what chances that this upward action will continue? Recently there are more and more talks about crude oil, and that it could return back to former lows, or even lower. Theoretically, guys, if we will not be confused by numbers that they are too small, technical picture tells that this is possible.
Take a look at monthly chart of crude, we have also large AB=CD that has 100% extension around 18$ level. The pattern that could lead market to this level - 1.618 3-Drive "Buy":
Currently it looks amazing, but technically we can't say that this is impossible, just imagine that this is not a crude oil and you do not see price scale. You will find nothing curious with this picture.
That's being said, this is major intrigue right now here - whether this setup will start or not...
Weekly
This chart looks not quite supportive to idea of action right to 1.56 level. Actually it shows opposite picture. Story has started right from strong drop down from the top. This was a bearish reversal swing and is has exceeded previous swing up. Then even more - upside action has taken a clear shape of AB=CD retracement. Price behavior was gradual and smooth, no real upside acceleration, a lot of overlapping candles, AB and CD legs have the same speed. Combining this action with initial thrust down, actually we have here "222" Sell pattern.
Besides, upside action now meets resistance of 50% Fib level and MPR1:
But on a Crude oil weekly chart does not look as cloudless as on CAD. Take a look, here we have some kind of reverse H&S pattern, and the same AB-CD retracement was in opposite direction compares to CAD.
Crude has not broken neckline and dropped down. This is not good sign, besides, CFTC data tells that last changes stand not in favor of CAD.
This leads us to very important conclusion. Real key to solution is 40$ level on Crude oil (shoulders' bottom) and 1.36 level on CAD. Because, if CAD will break it up - it will move above MPR1, destroy the harmony of "222" and AB-CD pattern and this will be irrational behavior for bearish market. This will tell that new trend is coming.
Daily
This time frame even increases importancy of current resistance on CAD. Price has completed our Butterfly "Sell" pattern that we've talked about in last videos on CAD. Butterfly is reversal pattern that also supports ideas on weekly chart that CAD should drop as normal bearish market should. Also this is upper border of the channel.
That's why if somehow butterfly will fail and CAD will jump higher - this will increase effect of breakout. Butterflies fail very rare, but if this happens, usually they fail miserably.
Currently this reversal is also supported by crude oil DRPO "Buy" pattern:
Intraday
On hourly chart of CAD we do not see something really special. You probably could recognize wide shape of H&S pattern, but it is not perfect. Most important here is existing of WPR1 right around previous top. This level finalizes importancy of 1.36 resistance level. It includes weekly 50% Fib level, AB-CD target, MPR1 and WPR1, daily butterfly "Sell". This is enough to make normal bearish market drop out from it and continue trend down. If this will not happen - this could bring great upside impulse to CAD and downside to Crude that will lead both price to dramatical levels:
Conclusion:
Currently situation looks cloudless for CAD, but recent price action on Crude oil, especially on weekly chart, that we treat as irrational a bit, could turn everything from top to bottom. CAD now stands at the edge that separates bearish market from dramatic upside action. So, 1.36 level could become very imporant turning point on CAD.
That's being said, on coming week we will take a close look at it. If CAD will break it up, this could open road to 1.55 area in long-term perspective and lead crude oil prices back to 18$ per barrel. Now it looks unbelievable, but who knows....
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.