Good Afternoon and welcome back to Aspire FX traders. As it is a new week, we shall be looking at the higher timeframes as well as looking at the prior weekly close. To begin the analysis of USD/CAD on the quarterly chart.
As we can see on the quarterly chart, we have seen a bullish breakout above prior resistance as well as a failed attempt at reaching the highs of 2016. Looking back at resistance dating all the way back to 1995, we can see the current quarterly candle closed in that region with a failed attempt to break the resistance. Looking at the bodily closures of the candles in 2015/2016, we have broken above these regions showing momentum to the upside, however we need to see if price can sustain these levels of support. The major mover for this quarter was the oil price war between the Saudi Arabian Prince and Vladimir Putin which lead to US oil prices falling 34%.
Looking at the monthly timeframe, we can see the levels of resistance more clearly. The prior month left a wick into the highs, closing above the prior candle bodies seen back in Jan/Feb 2016. One thing to note is that the level of resistance seen in May 2017 and tested at the end of 2018, has now been broken, so we could expect a retest, should we see exhaustion at these highs.
Another interesting Fibonacci placement shows the 78.6 region being retested twice and we could see reversals. HOWEVER, we do not see these targets of the fib being met. We are looking at the 78.6 as a ceiling for price and should price show clear rejections, we may execute short positions.
Taking a look at the weekly timeframe, we can see an inverse head and shoulder which has broken the neckline and jabbed straight into to the target resistance level of 1.46000. Looking left to May 2017, we have also broken the prior lower high and broken structure forming a higher high. Price wicked into 1.46000 psychological level and came straight back down, back below the resistance level of 1995, coincidentally around the same month of March. Currently price is stuck below this resistance at 1.42300 and we may see some relief after the massive bull run amounting to +-1200 pips.
Reviewing the daily timeframe , we have annotated the oil price war announcement that led to a surge in the US dollar against the Canadian dollar. The resistance level has seen 5 wick rejections on the daily, so we may see a rollover into the 2017 highs. This will largely be based off of the OPEC meetings and President Trump trying to negotiate a 10-15 million oil barrel supply cut per day. That is roughly a 10/15% supply cut. In basic supply and demand, when the supply is lower, the demand is higher. That means that if they cut the oil supply, they will be boosting the price of oil. This will strengthen the Canadian dollar leading to a retracement to the downside on USDCAD.
Having a quick look at USOIL on the daily, we can see price has seen more optimistic moves on the announcement that the oil price war may be cooling off. Plotting a fibonacci tool, the prior level of support in 2018 we broke and the 78.6 line up to the T. There is also a level of resistance plotted at $33.75 per barrel. This will see strength in CAD should oil recover as Canada is one of the top oil producers in the world.
On the 4 hour after seeing an impulse leg to the downside, we can see a build up of consolidation around 1.42500. Price has broken out of an ascending trend line and we are awaiting the deepest pullback for an entry short, with targets at 1.37450 and 1.35000 should oil see a strong recovery this week. 1.40000 will be a major level of support to break.
On the 1 hour, we have seen the trend line break, which we have highlighted as a zone. The 1 hour fibonacci is set for execution should we see any reversals. We have the Purple fibonacci levels for potential entries and stop placement above the grey zone highlighted.
Upcoming fundamentals this week, we have the BOC business outlook survey at 4:30pm. Wednesday we see the OPEC meeting and Thursday we have employment numbers from Canada. We also have unemployment claims for US on Thursday and CPI data on Friday. With all these high impact news events, make sure to use correct risk management and trade safe. Have a good evening and hit subscribe if you haven’t already, you will receive our daily blog posts directly to your email.