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USDCAD Bias Toward 2015 High On 4th Highest Volume Day of 2015

USDCAD Bias Toward 2015 High On 4th Highest Volume Day of 2015

2015-09-21 18:14:00
Tyler Yell, CMT, Currency Strategist
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Bias: USDCAD Bias Toward 2015 High On 4th Highest Volume Day of 2015

Point to Establish Long Exposure: On Fib Based Retracement from 9/17 Low

Target 1: 1.33520 2015 High

Target 2: 1.3500 Fibonacci Target of 2002-2007 Range

Invalidation Level: Daily Close below 9/17 Low, Significant CAD Strength on Close

Below 1.2950

Fundamentals:

The oil outlook continues to paint an ugly picture for the Canadian dollar. However, USDCAD was offered aggressively on the back of a Federal Reserve hold for almost 24 hours. Add to that, Canadian CPI on Friday came in-line with expectations along with temporary post-FOMC crude strength, but neither of these instances lasted.

After Yellen’s words were digested, the realization hit that the Fed holding had more to do with commodities and emerging markets weakness, the USD gained yet again. Lastly, fundamental and correlation focus to keep an eye on will be Oil. While correlation and causation should not be confused, it may be helpful to keep an eye on the $43.50 per barrel. The move lower in Crude aligned with the move higher in USDCAD and another breakdown in Oil could align with the next break higher toward new 2015 highs in USDCAD.

Technical Focus:

USDCAD Bullish Toward 2015 Highs

The overall bullish view was encouraged by Friday’s basing candle. You can look to the 1.2950 range lows to provide buying interest for a move towards the 1.3355

highs before targeting in the 1.3465 area.

2nd resistance: 1.3441 Weekly R2 Pivot

1st resistance: 1.3353 2015 High YTD

Spot: 1.3260

1st support: 1.3012 September 18th / Post-FOMC & CAD CPI Low

2nd support: 1.2950 Prior 4th Wave Low and Key Wave Structure Support

USD/CAD Sentiment:

USDCAD Bias Toward 2015 High On 4th Highest Volume Day of 2015

USDCAD - The ratio of long to short positions in the USDCAD stands at -2.22 as 31% of traders are long. Yesterday the ratio was 1.04; 51% of open positions were long. Long positions are 33.0% lower than yesterday and 6.9% above levels seen last week. Short positions are 53.6% higher than yesterday and 17.5% above levels seen last week. We use our SSI as a contrarian indicator to price action, and the fact that the majority of traders are short gives signal that the USDCAD may continue higher.

Volume:

USDCAD Bias Toward 2015 High On 4th Highest Volume Day of 2015

USDCAD saw its 4th highest Volume day of 2015 at FXCM. Considering this aligned with a bullish key day is significant. A bullish reversal candle aligned with the 4th highest volume day of 2015 favors that investors are committed to buying the dip on USDCAD and could continue to do so to lengthen the trend.

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