Is the CAD Headed for a Breakout? By GoLearn Forex
USD/CAD:
The Canadian Dollar from a technical standpoint is giving every indication it is going to breakout. Price has been consolidating for several weeks. You can see more clearly the consolidation in the Chart below depicted by the orange triangle.
Typically we draw a triangle where only one side represents the slope. However, the triangle drawn below is indicative of investor’s uncertainty with regards to the CAD. The Canadian economy is holding strong. The CAD is a commodity currency and will rise and fall as commodity prices rise and fall (in particular Oil). The Dollar has been rallying which should mean a weaker Loonie, but this rally stems from positive U.S economic data. The U.S economy and that of their northern neighbor are linked to a certain extent as they feed off of one another. Therefore, positive U.S data should also be good for the CAD. Therein lies the conflict and thus you have a dual sided sloping triangle.
The CAD is currently trading above its 50 day MA. Similar to the AUD and NZD it failed to breach the 100 day MA in spite of the Dollar rally. As the CAD wedges itself into the triangle we are looking for the following to occur in order to trip an entry signal. If the Loonie produces a candle south of the 50 day MA and south of the bottom slope of the triangle then look to enter a Long CAD position. Alternatively, if the CAD produces a candle body north up the upper slope of the triangle and the 100 day MA then enter a Short CAD position. Lastly, if a Short CAD signal triggers we see a near term take profit level at 1.0880 coinciding with the Fibonacci 23.6% Retrace level. We view this level as strong point of resistance.
Oil Takes Off by GoLearn Forex
The FOMC meeting came and went without stirring the waters. In the Euro-zone and London, Equity Markets finished their sessions in positive territory ahead of the highly anticipated U.S FED rate decision. The accompanying FOMC statement was intentionally left mostly unchanged so as not to roil markets. It served its purpose well as the DJIA finished the day off slightly lower by 10.88 points to close at 10,441.12 while the tech heavy NASDAQ closed up 5.86 points to 2,206.91.
In the Currency Markets the Dollar followed Equity Markets finishing the session nearly flat against its G-7 counterparts. The AUD gave up .61% still reeling from CB comments that took on a more dovish tone in regards to any near term future rate hikes.
Oil soared to 73.54 during intra-day trading before leveling off the day at 72.66, a gain of $1.97. Gold climbed $12.70 an ounce to 1,137.90. On the Agricultural front Soybeans, Cotton and Sugar continued to rally while Copper, Wheat and Corn declined on Dollar strength.
On the economic data docket for today we have the BOJ rate decision to be announced, although no change is expected. In the U.K, Retails Sales are set to be released while in Canada CPI data will hit the wire. In the U.S, Jobless Claims will print as will the measure of Leading Indicators and the Philadelphia FED survey.
Upcoming Forex Events for December 17, 2009
GBP Retail Sales (MoM) Forecast 0.50% Previous 0.40%
CAD Core CPI (MoM) Forecast 0.10% Previous 0.10%
USD Initial Jobless Claims Forecast 470.00K Previous 474.00K
JPY Interest Rate Decision Forecast 0.10% Previous 0.10%
Analysis by http://www.golearnforex.net
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