If there is a market that is affected by the international oil price , it is the usdcad. The current fall in oil price propelled Usdcad to a very high level, one that many people might not have seen.
From the economic point of view, united stated as the largest oil consumer in the world could afford to buy more than triple of oil with the same price.
This has helped saved so much money and USD (United State dollar) has gained very significantly. Little wonder it strengthened over almost all major currencies.
Also, the greatest strength of the USD was clearly seen against the CAD (Canadian dollar) as the later weakened even on its own.
Canada are not only US’s closest neighbor, but the largest supplier of oil to the US economy and this business relationship is fostered greatly by the price of oil.
When Oil rises in value, Canada laughs while the US frowns .When it dips in value, the reverse is the case.
This singular act has brought about a negative correlation model between the Oil market and the UsdCad market and that’s why in the last 6-7 months while Oil price dipped, the Usdcad was soaring and breaking more resistive levels.
At the beginning of this year, I posted an article on this blog about my view on the movement of Usdcad from the technical point of view.
You can read here
I forecast a probable reversal at 1.1890-1.1920 but the strength of the Usdcad was so powerful that this important resistive region was broken with ease and price now sits comfortably above 1.2500.
I will continue from that analysis
On the weekly chart, what we are currently having is a flat corrective pattern which is completing at a strong resistance.
The 5th wave of the C leg ( an impulsive 5-wave move) is formed at 1.618 projection of the 1st wave from the 4th wave. The flat pattern is also resting at a 50% retracement of the super wave {1}.
If this analysis holds, we should expect a big dip in the price of Usdcad from wave {2}and probably Oil price will rise in the first half of this year.
A bearish candles formation and momentum divergence at a
strong resistance on the weekly chart are early signs of bullish weakness
From the intraday point of view, price has started showing some bearish commitment, in a correcting channel after forming an impulsive 1st wave.
If the channel is broken downward, we should expect price at 1.1500 and below.
If the channel is broken upside and price eventually breaks 1.2800, we could see more bullish move. The intraday channel thereby becomes the action zone.
Patience is needed as we decipher what could be the next big
move!….Don’t miss it.
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