Forex Trading Alert: Can We Expect Further Rally in USD/CAD?

By: Nadia Simmons & Przemyslaw Radomski | Tue, Jul 15, 2014
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Forex Trading Alert originally published on July 15, 2014, 5:08 PM


 

Earlier today, the U.S. dollar hit a three-week high against its Canadian counterpart after Federal Reserve Chair Janet Yellen testimony in Congress. Will the exchange rate climb above 1.0800?

In our opinion, the following forex trading positions are justified - summary:

EUR/USD: none
GBP/USD: none
USD/JPY: none
USD/CAD: none
USD/CHF: none
AUD/USD: none


EUR/USD

The medium-term outlook hasn't changed much as EUR/USD still remains in the consolidation below the long-term resistance line. Today, we'll take a closer look at the very short-term changes.

EUR/USD
Larger Image

Looking at the above chart, we see that EUR/USD declined below the lower border of a consolidation (marked with blue), which triggered further deterioration and a drop below the neck line of the head and shoulders reversal formation. Taking this bearish fact into account, we are still convinced that our Wednesday's commentary on this currency pair is still up-to-date:

(...) we think that the pair is currently building the right shoulder of this pattern. If this is the case (...), we'll see a correction to the neck line based on the June 26 and July 7 lows (but further deterioration will be even more likely if the pair drops below the green support zone). If this area is broken, the exchange rate will test the strength of the June lows, where the size of a downswing will correspond to the height of the formation (this scenario is currently reinforced by the strong resistance zone created by the 50- and 200-day moving averages).

Very short-term outlook: bearish
Short-term outlook: mixed with bearish bias
MT outlook: bearish
LT outlook: bearish

Trading position (short-term): We are quite close to opening short positions in the EUR/USD pair, but, in our view, the move below the neck level is a bit too small to trust it. We'll keep our eyes open and will keep you updated.


USD/CAD

USD/CAD
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Quoting our Forex Trading Alert posted on July 11:

(...) USD/CAD rebounded sharply, invalidating last month's breakdown below the red declining support/resistance line. This is a strong bullish signal that will likely encourage forex traders to push the buy button, which may translate to further improvement (especially if the CCI and Stochastic Oscillator generate buy signals). If this is the case, the initial upside target will be around 1.0813, where the previously-broken lower border of the consolidation (marked with blue) is.

From this perspective, we see that the exchange rate extended gains this week, while the CCI and Stochastic Oscillator generated buy signals. Therefore, we believe that we'll see further improvement and currency bulls will realize the above-mentioned scenario in the coming week (or weeks).

Having discussed the above, let's move on to the daily chart.

USD/CAD Daily Chart
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On Friday, we wrote the following:

(...) the exchange rate climbed above the lower border of the declining wedge, invalidating earlier breakdown. This is a strong bullish signal, which may accelerate further improvement. If this is the case, the initial upside target for currency bulls will be around 1.0773, where the 23.6% Fibonacci retracement (based on the entire March-July decline) is. If it is broken, the next target will be the upper line of the declining wedge (currently around 1.0811).

As you see on the above chart, the situation has developed in line with our last commentary after USD/CAD bounced off the previously-broken lower border of the declining wedge and approached its initial upside target. Despite this improvement, we should keep in mind that the CCI and Stochastic Oscillator are overbought (additionally, there is a negative divergence between the CCI and the exchange rate), which suggests that the space for gains might be limited and a pause or correction is just around the corner.

Very short-term outlook: mixed
Short-term outlook: mixed
MT outlook: mixed
LT outlook: bearish

Trading position (short-term): In our opinion no positions are justified from the risk/reward perspective at the moment.


AUD/USD

The medium-term outlook remains mixed as AUD/USD is still trading in a consolidation between the May lows and the April high. Today, we'll take a closer look at the daily chart.

AUD/USD
Larger Image

From this perspective, we see that AUD/USD declined below its key support line, which triggered a pullback below the lower border of the consolidation (marked with blue). This is a bearish signal, therefore, we believe that our last commentary on this currency pair is up-to-date:

(...) if this important line is broken (...), we think that the current correction will accelerate and we'll see a drop to the July low of 0.9327 or even to the declining red support line (currently around 0.9316).

Very short-term outlook: mixed
Short-term outlook: mixed
MT outlook: mixed
LT outlook: bearish

Trading position (short-term): In our opinion no positions are justified from the risk/reward perspective at the moment.

Thank you.

 


 

Nadia Simmons

Author: Nadia Simmons

Nadia Simmons
Sunshine Profits.com
Forex & Oil Trading Strategist
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Nadia Simmons

Nadia is a private investor and trader, dealing in currencies, commodities (mainly crude oil), and stocks. Using her background in technical analysis, she spends countless hours identifying market trends, major support and resistance zones, breakouts and failures. In her writing, she presents complex ideas with clarity that enables you to easily understand market changes, and profit on them. Nadia is the person behind Sunshine Profits' 3 premium trading services: Forex Trading Alerts, Oil Trading Alerts Alerts, and Oil Investment Updates.

All essays, research and information found above represent analyses and opinions of Nadia Simmons and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Nadia Simmons and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Nadia Simmons is not a Registered Securities Advisor. By reading Nadia Simmons's reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Nadia Simmons, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Copyright © 2013-2014 Sunshine Profits

Przemyslaw Radomski

Author: Przemyslaw Radomski

Przemyslaw Radomski, CFA
Founder, Editor-in-chief
Gold & Silver Investment & Trading Website - SunshineProfits.com

Przemyslaw Radomski

Przemyslaw Radomski, CFA (PR) is a precious metals investor and analyst who takes advantage of the emotionality on the markets, and invites you to do the same.

His company, Sunshine Profits, publishes analytical software that anyone can use in order to get an accurate and unbiased view on the current situation.

Recognizing that predicting market behavior with 100% accuracy is a problem that may never be solved, PR has changed the world of trading and investing by enabling individuals to get easy access to the level of analysis that was once available only to institutions.

High quality and profitability of analytical tools available at www.SunshineProfits.com are results of time, thorough research and testing on PR's own capital.

PR believes that the greatest potential is currently in the precious metals sector. For that reason it is his main point of interest to help you make the most of that potential.

As a CFA charterholder, Przemyslaw Radomski shares the highest standards for professional excellence and ethics for the ultimate benefit of society.

Sunshine Profits enables anyone to forecast market changes with a level of accuracy that was once only available to closed-door institutions. It provides free trial access to its best investment tools (including lists of best gold stocks and best silver stocks), proprietary gold & silver indicators, buy & sell signals, weekly newsletter, and more. Seeing is believing.

Disclaimer: All essays, research and information found above represent analyses and opinions of Przemyslaw Radomski, CFA and Sunshine Profits' associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Przemyslaw Radomski, CFA and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Radomski is not a Registered Securities Advisor. By reading Przemyslaw Radomski's, CFA reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Przemyslaw Radomski, CFA, Sunshine Profits' employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

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