Hi Guys, today we're looking at the trading pairs CADUSD (USDCAD) side by side. If you have been following you will have seen the chart we posted on Crude oil and calling for a reversal at the 42 dollar area and it has respected this request and the 200 SMA on the 2 month chart with lots of historical support. With the rise in crude prices expected we can now look at the Canadian dollar for strengthening also over the next few months.
The US dollar has had a great run over the last year but fundamentally the cracks are begining to show. Many hedge funds have been unwinding their US$ positions for sometime now and the commercials are begining to wake up now too. On the technical side USDCAD has just topped in our opinion coinciding with the previous level of resistance in the 1.37 area and in fact some exchange charts I have been watcing showed a spike to 1.41 over the past two days. We expect downside to occur now on the USD side and CAD to move up two fib levels to the 200 SMA on the monthly chart. This would be about .86 cents to the US dollar area.
With commodities gold, silver and oil etc., generally showing some bullishness, will also have and effect on weakening the US dollar as commodities are still settled in US dollar. Canada being a resource based economy tends to benefit when resouce commodity prices move higher.
The indicators are mixed right now as we are a bit ahead of the curve with our predictions on these monthly charts and you can see StochasticRSI on the CAD side has bottomed but not turned yet as with MACD which does seem to say more upside for the US dollar so it is not yet clear and this could mean more temporary weakness in CAD but these big reversals do take time especially charting at this time scale. So we will watch and revise as the story plays out and becomes more clear.
The US dollar has had a great run over the last year but fundamentally the cracks are begining to show. Many hedge funds have been unwinding their US$ positions for sometime now and the commercials are begining to wake up now too. On the technical side USDCAD has just topped in our opinion coinciding with the previous level of resistance in the 1.37 area and in fact some exchange charts I have been watcing showed a spike to 1.41 over the past two days. We expect downside to occur now on the USD side and CAD to move up two fib levels to the 200 SMA on the monthly chart. This would be about .86 cents to the US dollar area.
With commodities gold, silver and oil etc., generally showing some bullishness, will also have and effect on weakening the US dollar as commodities are still settled in US dollar. Canada being a resource based economy tends to benefit when resouce commodity prices move higher.
The indicators are mixed right now as we are a bit ahead of the curve with our predictions on these monthly charts and you can see StochasticRSI on the CAD side has bottomed but not turned yet as with MACD which does seem to say more upside for the US dollar so it is not yet clear and this could mean more temporary weakness in CAD but these big reversals do take time especially charting at this time scale. So we will watch and revise as the story plays out and becomes more clear.