The Canadian Dollar struggling to regain its footing against the US Dollar with USD/CAD trading just below near-term resistance into the start of the week. These are the updated targets and invalidation levels that matter on the USD/CAD charts. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this Loonie price setup and more.
Canadian Dollar Price Chart – USD/CAD Daily
Technical Outlook: In my previous Canadian Dollar Price Outlook we highlighted a key near-term resistance zone at 1.3284/88 while noting, “Expect acceleration IF price can break higher here with such a scenario exposing longer-term downtrend resistance near 1.3355.” A topside breach last week saw price register a high at 1.3348 before pulling back – is there more to go?
Initial support now rests back at the 61.8% retracement at 1.3288 with broader bullish invalidation at the September channel line / monthly open at 1.3240. A topside breach targets the 100% extension at 1.3382– looking for a bigger reaction there IF reached.
Why does the average trader lose? Avoid these Mistakes in your trading
Canadian Dollar Price Chart – USD/CAD 120min
Notes: A closer look at Loonie price action shows USD/CAD trading within the confines of an ascending pitchforkformation extending off the September / October lows. The 75% parallel caught resistance on Friday at with short-term descending channel guiding this decline and further highlighting near-term support at 1.3284/88– look for a reaction there.
A downside break would expose subsequent support objectives at 1.3266, the 1.618% extension at 1.3253 and 1.3240– both areas of interest for possible exhaustion IF reached. A topside breach of this channel still faces the September high-day close at 1.3335 with 1.3355 and 1.3382 still critical.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
Bottom line: USD/CAD is coming off uptrend resistance but remains constructive for now while within this formation. From a trading standpoint, we’ll favor fading weakness while above 1.3253 targeting a test of the upper parallels near 1.3382. Ultimately, the goal is to sell a higher-high here for a larger correction. Keep in mind we get Canada employment data on Friday. Review my latest Canadian Dollar Weekly Price Outlook for a deeper look into the longer-term USD/CAD technical trading levels.
Canadian Dollar Trader Sentiment – USD/CAD Price Chart
- A summary of IG Client Sentiment shows traders are net-short USD/CAD – the ratio stands at -2.66 (27.3% of traders are long) – bullish reading
- Traders have remained net-short since September 12th; price has moved 1.0% higher since then
- Long positions are 12.6% higher than yesterday and 13.1% lower from last week
- Short positions are 0.6% higher than yesterday and 19.1% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/CAD prices may continue to rise. Yet traders are less net-short than yesterday but more net-short from last week and the combination of current positioning and recent changes gives us a further mixed USD/CAD trading bias from a sentiment standpoint.
See how shifts in USD/CAD retail positioning are impacting trend- Learn more about sentiment!
Key US / Canada Data Releases
Economic Calendar – latest economic developments and upcoming event risk.
Active Trade Setups
– Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
EUR/GBP May Rise if Brexit Hopes Continue to Fade
British Pound Outlook, Brexit, GBP/USD Technical Analysis – Talking Points
- British Pound may reverse recent gains if Brexit perils undermine confidence
- UK members of Parliament will be voting on Boris Johnson’s new Brexit plan
- Will DUP derail Johnson’s plan, and if so, will there be yet another extension?
Learn how to use political-risk analysis in your trading strategy!
The Euro may edge higher against the British Pound if hopes for an orderly Brexit continue to dissolve. On October 17, UK Prime Minister Boris Johnson and European Commission President Jean-Claude Junker jointly announced that a Brexit deal had been reached. Sterling rallied on the news, though its upside movement was curtailed by news that the Irish Democratic Unionist Party (DUP) would not support his plan.
Securing their support is essential if Mr. Johnson wants to pass a deal through the House of Commons. If he fails to do so, it could severely derail plans for an orderly Brexit which would likely see the British Pound reverse a significant portion of its recent gains. However, EU Council President Donald Tusk has not ruled out the possibility of an extension if lawmakers failed to agree on a deal on Saturday.
In Parliament there are currently 287 voting conservative lawmakers which Mr. Johnson will need if his proposal is to survive. He may also have to lean on over 20 former Tory MEPs who switched over to become independents. However, that may not be enough votes which may compel the PM to ask for help across the political aisle.
Market Analysis of the Day: Will the British Pound Reverse its Recent Gains?
GBP Index chart created using TradingView
FX TRADING RESOURCES
— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter
Australian Dollar Firm After China GDP Miss But Trend Aims Lower
CHINA, GDP, TRADE WAR, AUSTRALIAN DOLLAR – TALKING POINTS:
- 3Q Chinese GDP registers narrowly worse than expected at 6.0% y/y
- Industrial production data, US trade talks may have offset the headline
- Australian Dollar little-changed but overall trend still pointing lower
Where will markets end 2019? See our Q4 forecasts for currencies, commodities and stock indexes!
The Australian Dollar found little of interest in mildly disappointing Chinese GDP data. The figures put the on-year growth rate at 6 percent, a hair lower than the 6.1 percent expected by economists. Nevertheless, this marks the slowest pace of expansion in at least 27 years.
Upbeat industrial production readings might have helped offset a soggy headline figure. The rate of on-year growth unexpectedly jumped to a three-month high of 5.8 percent. Early signs of stabilization in retail sales figures may have helped as well.
The report’s limited implications for larger macro themes dominating investors’ attention may likewise explain the tepid response. Extrapolating a view on future Chinese growth seems nearly impossible without greater clarity on trade negotiations with the US, making today’s release appear somewhat moot.
Assessing the broader landscape, choppy AUD/USD consolidation since early August leaves firmly intact a well-defined downtrend established from late December 2018. Prevailing monetary policy trends suggest it is likely to continue, with longer-term charts setting the stage for deep losses in the months ahead.
Daily AUD/USD chart created with TradingView
AUD/USD TRADING RESOURCES
— Written by Ilya Spivak, Currency Strategist for DailyFX.com
To contact Ilya, use the comments section below or @IlyaSpivak on Twitter
USD/JPY Rate Faces Bearish Reversal Pattern Amid Brexit Deal Hopes
Asia Pacific Market Open Talking Points
Find out what the #1 mistake that traders make is and how you can fix it!
AUD/USD, NZD/USD Climb as Japanese Yen and US Dollar Sink
The sentiment-linked Australian Dollar and similarly-behaving New Zealand Dollar soared against their major counterparts on Thursday. This was at the expense of the anti-risk Japanese Yen and haven-linked US Dollar. A rosy mood in stock markets, fueled by hopes of a Brexit deal, could have been the source of optimism from investors as the S&P 500 closed 0.28 percent to the upside.
During European trading hours, European Commission President Jean-Claude Juncker and UK Prime Minister Boris Johnson announced that a Brexit deal has been reached. However, optimism receded after officials from the Democratic Unionist Party (DUP) saying that they would not support Johnson’s agreement. Their support is crucial for Mr Johnson to pass his deal in Parliament perhaps on Saturday.
Still, the British Pound and Euro aimed nervously higher despite giving up some losses. Disappointing economic data out of the United States also likely fueled their gains against the US Dollar. Local industrial production unexpectedly declined 0.4 percent m/m in September versus -0.2% anticipated. US front-end government bond yields traded lower as markets kept their hopes up for further Fed easing.
Friday’s Asia Pacific Trading Session
Ahead, the Australian Dollar will be closely watching incoming third quarter Chinese GDP data after rosy local jobs data offered AUD/USD a boost. Data out of China has been tending to underperform relative to economists’ expectations, opening the door to a continuation of the trend. As a China-liquid proxy, the Aussie could reverse recent gains should weakness in growth from a close trading partner spread slowdown fears.
Join me later today at 1:45 GMT for LIVE coverage of China GDP where I will be going over the reaction in the Australian Dollar!
Meanwhile, the Japanese Yen will likely look past a set of local CPI data due to its limited implications for near-term BoJ policy action. Rather, it may focus more on China GDP and the mood in regional stock exchanges. S&P 500 futures are little changed with a slight downside bias heading into Friday’s APAC session. A bittersweet mood from investors may boost the Yen.
Japanese Yen Technical Analysis
The USD/JPY could be in the process of carving out a rising wedge candlestick formation. This is typically a reversal pattern and if so, may down the road open the door to downtrend resumption – as outlined in my Q4 USD/JPY forecast. As such, the latest test of the ceiling of the Rising Wedge may pave the way for a test of the floor which goes back to the end of August – red area on the chart below.
Chart of the Day – USD/JPY
FX Trading Resources
— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter
Latest News6 days ago
Profits expected to fall as earnings season kicks off in week ahead
Latest News6 days ago
These stocks could be winners if US completes this phased trade deal with China
Forex7 days ago
Gold Sinks, S&P500 Rises Further on Solid Consumer Sentiment Data
Stocks6 days ago
It is shaping up to be a good week for earnings
Latest News6 days ago
Tech stock gains this big imply a strong 2019 stock market finish
Latest News7 days ago
Artists thrive after showing at Artist Alley during New York Comic Con
Latest News6 days ago
Wendy’s stock jumps on plans for nationwide breakfast, European expansion
Forex6 days ago
AUD in Thrall to US-China Trade Story, RBA Minutes, Jobless Data Loom