News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bearish
GBP/USD
Mixed
USD/JPY
Mixed
More View more
Real Time News
  • We are days away from the US Presidential election and the markets are caught in the vortex. A contested outcome would raise serious volatility for the markets whereas a decisive outcome seems to support bullish $SPX and Dollar views from the market rank. https://www.dailyfx.com/forex/video/daily_news_report/2020/10/31/SP-500-and-Dollar-Forecast-Leads-Global-Markets-with-Elections-Expectations-.html https://t.co/JnJbyu6TRT
  • The future implications of the #Elections2020 may influence $AUDUSD following the #RBA and #Fed rate decisions as Congress struggles to pass another round of fiscal stimulus. Get your #currencies update from @DavidJSong here: https://t.co/soPu0Wefz2 https://t.co/UWsERr2AYh
  • Gold prices declined in the aftermath of bearish technical cues, but a key zone of support was reinforced. $XAUUSD volatility risk is elevated ahead of the #Elections2020. Get your #metals update from @ddubrovskyFX here: https://t.co/gWOxdqk8OL https://t.co/gBMgF0YNjH
  • USD awakens, placing GBP/USD on the backfoot, while EUR/GBP cracks 0.90. Get your #currencies update from @JMcQueenFX here: https://t.co/fndMQJLul8 https://t.co/elz5gNAKrB
  • What are some factors impacting Euro’s forecast this quarter? Get your free forecast here: https://t.co/kpBYVz31Bd https://t.co/7EzMPg9Kqg
  • Emotions are often a key driving force behind #FOMO. If left unchecked, they can lead traders to neglect trading plans and exceed comfortable levels of risk. Read on and get your emotions in check here:https://t.co/eILWbFgHRE https://t.co/DjMdgL5x19
  • Technical indicators are chart analysis tools that can help traders better understand and act on price movement. Learn more about the importance of technical analysis here: https://t.co/NpC1D8y4Aa https://t.co/6sqqRfTri2
  • The British Pound, Australian Dollar and US Dollar may all experienced heightened periods of volatility as geopolitical risks in North America, Asia and Europe rattle global financial markets. Get your $GBPUSD market update from @ZabelinDimitri here:https://t.co/0EFToM5Y8I https://t.co/5gsZQfX6aG
  • The New Zealand Dollar may continue to outperform the haven-associated US Dollar as price breaks above key long-term resistance. Get your $NZDUSD market update from @DanielGMoss here:https://t.co/D1DxtDkJXd https://t.co/DwkK9F9FCJ
  • #Gold prices declined following bearish technical cues, but a key zone of support was reinforced over the past 48 hours. #XAUUSD volatility risk is elevated ahead of the #USElection - https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2020/10/30/Gold-Technical-Forecast-Election-Raises-Volatility-Risk-But-Support-Holds.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/5hgGEojvIE
USD/CAD Crests at Trend Line and Wave Measurement Confluence

USD/CAD Crests at Trend Line and Wave Measurement Confluence

2016-08-29 21:12:00
Jeremy Wagner, CEWA-M, Head of Education
Share:

Talking Points

-Fed Fund futures show a 42% chance of a rate hike in September

-USD/CAD tests trend line resistance near 1.3070 increasing the chance of a reaction lower

-A break above the trend line is bullish, but SSI is leaning bearish

As the Fed talks up a more aggressive path for rate hikes, the US Dollar has strengthened in broad based fashion. The Fed Funds futures are showing a 42% chance of a rate hike at the September meeting which is the highest level in 3 months. Since these odds are near a 50/50 split, that means you have a large portion of folks that are going to be disappointed.

Perhaps traders await the non-farm payroll report on Friday for clarity. The expectation is for less of an increase in jobs being created so we will have to wait and see the actual result. In the meantime, we will look to the technical charts to see if we can glean any insight as to the next higher probability move.

The Bearish Wave Count

One bearish Elliott wave count we are following is that prices continue to correct lower in complex fashion to complete green wave B. There are a couple points of resistance that show up in the 1.3020-1.3070 price zone that may create a reaction lower.

USD/CAD Crests at Trend Line and Wave Measurement Confluence

Chart prepared by Jeremy Wagner

From the August 18 low to today’s high, prices have carved out what appears to be a zig zag that is shaped as an equal wave pattern. Prices would need to materially push above 1.3050 to negate this equal wave pattern. Additionally, there is trend line resistance looming overhead near 1.3070 as is the 61.8% retracement level from the July 27 to August 18 down trend (red line).

Therefore, the case is built that we have formidable resistance forming between now and the 1.3070 area. This resistance area is strong enough that it may push prices lower to retest the 1.2760 area. A trader could use the red trend line as risk.

A Bullish Wave Count

Since the 1.3020-1.3070 area is such a strong resistance point, if prices are successful in breaking above 1.3070, then it is a force to recognize. As a result, we have a bullish wave count handy to help explain the potential for a break higher and how to trade it.

A break higher could fall into the camp as the fifth wave of a diagonal pattern. This pattern is quite strict in that it would subdivide higher as a zig zag and would need to terminate below 1.3400 so wave 3 is not the shortest of waves 1, 3, 5 of the diagonal. Therefore, this pattern suggests a break higher above 1.3070, but the breakout is not long lasting.

USD/CAD Crests at Trend Line and Wave Measurement Confluence

Chart prepared by Jeremy Wagner

From a sentiment perspective, there might be a hint of bearishness, though it is weak. Even though the raw reading is +1.18 (bullish), the trend is towards a lower number which is bearish. In the end, sentiment is providing a mixed signal so look for the shift in sentiment to confirm which side is stronger. If SSI shifts more towards negative reading, then it is bullish. If sentiment shifts more towards the positive reading, then it is bearish.

As a result, this 1.3070 area is a hot spot where traders can position with a good chance at a good risk to reward ratio in line with our trait of successful trader’s research.

Suggested Reading:

Gold Prices Drop as Fed Rate Hike Odds Rise

Dow Jones Industrial Average Finds Support Post Jackson Hole

Learn how to use USD/CAD live trader positioning in your trading decision

Interested in a quarterly outlook for USD or other markets? Download our quarterly forecast here.

---Written by Jeremy Wagner, Head Trading Instructor, DailyFX EDU

Follow me on Twitter at @JWagnerFXTrader .

See Jeremy’s recent articles at his Bio Page.

To receive additional articles from Jeremy via email, join Jeremy’s distribution list.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES