As most of you guys know, I really enjoying analysing the Canadian dollar since the fundamentals behind it are really fascinating.
Most of the people think that when something influences the USD or the west as a whole, the CAD should follow it as well. But it doesn’t work this way and history has given as a few examples such as the recession back in the 2000’s and the financial crisis in 2008. That doesn’t mean that the CAD got away unscathed, but due to its good regulations on the banking system there was no collateral damage. And if the corona-crisis deepens I am pretty sure that the Canadian financial system would take less damage than many others.
From a COT perspective both CAD and JPY hold strong long contract positions, but a stronger short-term momentum can be seen from the Canadian Dollar.
On the technical side from March till the end of May, price ranged between the monthly critical area and the daily critical one near 75.000 and 78.000. Afterwards there was a break above the 78.000 zone and price is consolidating right now.
Two possible scenarios can take place:
1. Price receiving strong demand pressure and moving towards the daily critical near 85.000. Then it will do a small correction to the previous critical zone near 82.000 and move once again towards the monthly upper trendline near 90.000. There we have a triple confirmation point: a monthly critical zone, the upper trendline itself and the 0.5 Fibonacci level.
2. Before scenario one occurs, we may see a move once again towards the bottom monthly critical near 75.000. This scenario is less likely to happen.
Happy Trading!
Most of the people think that when something influences the USD or the west as a whole, the CAD should follow it as well. But it doesn’t work this way and history has given as a few examples such as the recession back in the 2000’s and the financial crisis in 2008. That doesn’t mean that the CAD got away unscathed, but due to its good regulations on the banking system there was no collateral damage. And if the corona-crisis deepens I am pretty sure that the Canadian financial system would take less damage than many others.
From a COT perspective both CAD and JPY hold strong long contract positions, but a stronger short-term momentum can be seen from the Canadian Dollar.
On the technical side from March till the end of May, price ranged between the monthly critical area and the daily critical one near 75.000 and 78.000. Afterwards there was a break above the 78.000 zone and price is consolidating right now.
Two possible scenarios can take place:
1. Price receiving strong demand pressure and moving towards the daily critical near 85.000. Then it will do a small correction to the previous critical zone near 82.000 and move once again towards the monthly upper trendline near 90.000. There we have a triple confirmation point: a monthly critical zone, the upper trendline itself and the 0.5 Fibonacci level.
2. Before scenario one occurs, we may see a move once again towards the bottom monthly critical near 75.000. This scenario is less likely to happen.
Happy Trading!
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Lets go! Good luck to all.