Jump to content
Sign in to follow this  

USDCAD inverse relationship with Oil

Recommended Posts

While leaving Oil and stock indices to do their thing I have been having a look at FX.  USD volatility due to the Fed seems to dominate at present and the EUR and GBP crosses are in a difficult W3-4 place with whipsaw action that will kill ya.  AUS and CAD are a bit different, thought still impacted by USD volatility of course but in the case of AUS mining seems to be a bigger factor and for CAD it is Oil.

 

Given that last I thought I would share my analysis on USDCAD to see if anyone has a view.  Having taken some trades short since the turn I have been wondering if we really did see a W5 top or could this be a W3-4 retrace.  If CAD does track Oil and my analysis of Oil is correct that we have not yet seen the bottom then perhaps we have not yet seen the top of USDCAD.  At a minimum, if Oil is in a retrace back down with another leg up to go (not yet sure of that, we could have had the turn back down to W5 and true bottom) then surely USDCAD will rally soon?

 

On the Weekly chart it is clear that this pair has gone higher in the past and also we did not get a negative momentum divergence, which I would expect to see at a major turn, so perhaps this is still to come?

 

On the Daily a decent tramline has been broken but that is often the way with a W4 (as the W4 turn sets up the "real" tramline) and there is support/resistance just below the 62% Fib at 12850ish.  Note no Neg Mom Div on the Daily either at the possible W5 turn!  I have 2 alternative valid EW counts (a 1-5 and an A-B-C) and strong Pos Mom Div building, suggesting a rally is imminent.

 

On the Hourly I have a decent count on the final wave down 1-5 but where will it conclude?  I am waiting for a fresh lower low and Pos Mom Div at the turn back up, maybe at the support/resistance point (12850).  If I see that I will take a Long and hope for at least a decent rally if not a W5 high high on the Daily!

 

here are the charts, look forward to your thoughts:



Share this post


Link to post

Which has just produced a spike down close to that congestion zone and gave me my Pos Mom Div.  Time for a Long?  Could be a bit more volatility and for the more caution a break of my upper tramline could be a safer bet.

Share this post


Link to post

While we are all waiting on Oil and Stocks to show their hand on medium/long term direction I was looking at this cross to get some clues on Oil.  There does seem to be a strong correlation here and some commentators seem to think we have seen the tops of this market but I am not so sure.  I can easily see another leg up to a higher high with strong Pos Mom Div on the Daily chart and unconvincing Neg Mom Div on the weekly at the previous high.

 

At a minimum I foresee a strong retrace and if this market does turn at, say the 88% Fib (brown line on the hourly) with strong supporting indicators set up then it would corroborate a turn down on Oil for me.

 

Anyone agree (why?) or got another position?

 



Share this post


Link to post

Does anyone use Gartley? And can tell me what on earth this latest USDCAD Gartley chart means.

 



 

 

Share this post


Link to post

No idea what that is Caseynotes...

 

I'm thinking that USDCAD is making an ending Triangle.  If the upper line is broken then the breakout could be strong.

 



Share this post


Link to post

Gartley appears to be based on astrological signs haha. Though I do use that 'three push pattern' and that 'AB-CD pattern looks very EW?

 



Share this post


Link to post

I've read some stuff over the weekend about CAD being heavily linked to Commodities.  With carnage about to occur in Oil ( I believe). then USDCAD Long at the right moment could be a winner. Breakout from the wedge would offer a low risk entry to a profitable position...I would have to conclude.  Maybe entry around 12900 if price hit that( of course with a stop loss but that could be quite tight because it could burst out? ) would be a buy signal with an upside of 13100 with a three up? So 200pips? C

Share this post


Link to post

Most price gaps are closed and when they are not that is a very strong signal of a trend change (or continuation signal, depending on where it occurs in the bigger picture).  At present I would be expecting these Doha gaps to be closed but that does not negate the trend direction they may be indicating.  An overreaction usually gets an opposing retrace but if the trend has just been signaled then that retrace (currently happening across may markets!) will turn and a more forceful move will ensue.  It is noteworthy that this turn back often happens in or around the point at which the gap is closed...

Share this post


Link to post

Has USDCAD just turned?  Pos Mom Div has been building on the Daily for some time and now we have it on the Hourly as well.  Turn is at the Daily 50% Fib, also at support line, with a clear EW1-5 down from the last major high and a small 1-2 completing.  Worth a Short with stop below the recent low for me, especially with Brent Crude apparently turned down.

 



Share this post


Link to post

Join the conversation

You are posting as a guest. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
You are posting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  

  • Member Statistics

    • Total Topics
      7,781
    • Total Posts
      40,625
    • Total Members
      50,997
    Newest Member
    Bukake151
    Joined 22/11/19 05:42
  • Posts

    • Crude palm oil prices could hit $700/mt FOB Belawan in 2020: Golden-Agri https://www.spglobal.com/platts/en/market-insights/latest-news/agriculture/111419-crude-palm-oil-prices-could-hit-700-mt-fob-belawan-in-2020-golden-agri
    • Well Bitcoin broke $8k and is currently around the $7.5k price area. It is not looking good at all.  It seems my $6.3k - $6.6k price area which I think could be the bottom or this specific downward move looks more likely now. I mentioned this price area on Monday (a few posts above) and now I think unless there is some serious buying or spectacular news followed by some serious pumping and short covering then Bitcoin is heading towards this price zone. 
    • There are many different ways to trade and applying or adopting trend following principles is merely just one such way. Trading more frequently does not guarantee any more success but it can increase the chances of making more losses if you do not have a robust trading system that is based on a sound trading plan. Trend following does not have to involve regular or frequent trading. That is the beauty of it. You can merely wait until you identify a trend which you wish to trade. Of course they will not all be successful as the trend could reverse sharply against you, it could be a false trend (looks like a trend but not) or simply the volatility could stop you out.  Day trading really is for full time traders in my personal opinion unless you have an expensive automated system which has been tested rigorously or you are an exceptional trader which can consistently make profits on most days without gambling, hoping or relying on luck.  Trend following suits me based on the time I have available to trade. I accept it is not for everyone but I believe all trading includes an element of trend following. Just how much depends on your trading style and methodologies adopted. 
×
×