Inside the Currency Market: USD/CAD

September 2015 represents the 1 year anniversary since the ECB adopted negative deposit rates which saw EUR/USD drop 3500 pips from 1.3900’s highs to reach 1.0400 lows. The corollary is USD/CAD whose price path began from 1.0600 lows to reach 1.3400 highs, a 2800 pip rise. Despite 1 year later, USD/CAD still suffers the effects of the 1.0600 and 1.0800 breaks as both averages failed to normalize by meeting current prices and are currently way way overbought. Not only is 1.0644 an overbought long term average but equally overbought is 1.0605 and is represented at the 1500 day average. The tops in all averages are found at 1.3245, 1.3443 and 1.3503. Above 1.3503 means price enters new degrees of way overbought but overbought is not only why rallies are sold but volatility is high. USD/CAD is not the pair to hold for longer term gains despite the BOC’s desire to see USD/CAD higher. Short term and intraday, USD/CAD downside is held by significant points at 1.3073, 1.2958, 1.2247 and 1.1705.

So despite overbought, USD/CAD will continue its slow rise. From current 1.3148, USD/CAD is again heading higher to 1.3281 and 1.3321.

USD/CAD. Bottom. 1.3082. Range break above 1.3176, 1.3263, Below 1.3117, 1.3073, 1.3032. Overbought sell point 1.3321, Failure point 1.3281. Strategy. Longs above 1.3149, target 1.3321 then reverse to 1.3235. Points on the way up, 1.3151, 1.3164, 1.3170, 1.3177, 1.3193, 1.3214, 1.3225, 1.3241, 1.3281 and 1.3321.

Shorts below 1.3146, target 1.3114. Watch here for reversal to 1.3146 and higher. Points on the way down, 1.3137, 1.3129, 1.3123, 1.3116, 1.3082 Bottom. Point 1.3114 must cross to go higher.

Brian Twomey, Inside the Currency Market, btwomey.com

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