USD/CAD correlation with Oil suggests a push to the downside
The war in the Middle East has escalated with US fighter jets hitting Syrian militia in retaliation for attacks on US forces. This has intensified concerns that the conflict may spread.
Although we have yet to see an impulsive drive higher in US Crude Oil, chart analysis suggests a pump to the upside. A higher Oil price has a strengthening effect on the Canadian Dollar (weaker USD/CAD).
DXY (USD Index) – the index offers complex patterns with both bullish and bearish aspects:
Bullish: broken out of a wedge formation to the upside. The measured move target is 107.62. The medium-term resistance is located at 107.64. A Butterfly formation will complete at 107.57.
Bearish: We are assessed as being within the BC leg of the cypher pattern. Although there is mild intraday support at 107.17, the minimum requirement is the 38.2% pullback level at 105.94. With analysis suggesting a medium-term base in U.S. stock indices, we could see a sustained sell-off towards the 88.6% pullback level at 105.12.
USD/CAD - the eight-hour chart highlights an Ending Wedge formation. The trend of higher highs is located at 1.3860. On a break of the trend of higher lows at 1.3706, the measured move target is 1.3417.
The four-hour chart highlights the completion of a bearish Butterfly formation at 1.3848.
The one-hour chart highlights a bearish Head and Shoulders pattern. On a break off support at 1.3805, the measured move target is 1.3760.
Conclusion: time frame analysis suggests another drive higher during today's session. This will then complete a DeMark correction count and offer a negative bias. The prime resistance level is located at 1.3848. A break of the neckline support at 1.3805 could indicate a change in sentiment.
Resistance: 1.3844 (swing high), 1.3848 (butterfly), 1.3860 (higher highs)
Support: 1.3805 (neckline), 1.3760 (head and shoulders measured move), 1.3417 (wedge target)
Although we have yet to see an impulsive drive higher in US Crude Oil, chart analysis suggests a pump to the upside. A higher Oil price has a strengthening effect on the Canadian Dollar (weaker USD/CAD).
DXY (USD Index) – the index offers complex patterns with both bullish and bearish aspects:
Bullish: broken out of a wedge formation to the upside. The measured move target is 107.62. The medium-term resistance is located at 107.64. A Butterfly formation will complete at 107.57.
Bearish: We are assessed as being within the BC leg of the cypher pattern. Although there is mild intraday support at 107.17, the minimum requirement is the 38.2% pullback level at 105.94. With analysis suggesting a medium-term base in U.S. stock indices, we could see a sustained sell-off towards the 88.6% pullback level at 105.12.
USD/CAD - the eight-hour chart highlights an Ending Wedge formation. The trend of higher highs is located at 1.3860. On a break of the trend of higher lows at 1.3706, the measured move target is 1.3417.
The four-hour chart highlights the completion of a bearish Butterfly formation at 1.3848.
The one-hour chart highlights a bearish Head and Shoulders pattern. On a break off support at 1.3805, the measured move target is 1.3760.
Conclusion: time frame analysis suggests another drive higher during today's session. This will then complete a DeMark correction count and offer a negative bias. The prime resistance level is located at 1.3848. A break of the neckline support at 1.3805 could indicate a change in sentiment.
Resistance: 1.3844 (swing high), 1.3848 (butterfly), 1.3860 (higher highs)
Support: 1.3805 (neckline), 1.3760 (head and shoulders measured move), 1.3417 (wedge target)