USDCAD & The Return of ForexVader - A lesson in analysis.
3 years! It has been, 3 years!
Where did I go? Who cares. Let's jump straight back in...
Starting simple, just how we like it, let's take a look at an interesting little set-up on the
USDCAD
.
It's pretty obvious what we're seeing here on the daily.
A tweezer top candlestick pattern retesting the bottoms of both the 1.3000 SR level and the 200EMA after a break of both at the end of September. Add to this a perfect 0.618 retracement, overbought conditions and MACD convergence, it's an obvious sell! Right?
So why is our investment strategy neutral?
Despite this being my first post in a while, Ive still been lurking in the background. One thing that inspired this post is seeing far too many ideas trying to convince readers with very narrow, single time-frame analysis. So humour me here, open up a separate chart and let us adventure a little deeper and a little wider. Starting on the 4hr chart, you'll instantly notice that price is still trending above the 50EMA and losing bearish momentum. RSI shows oversold conditions. Yet, there is a double top pattern (which is more obvious on the 1hr) against the 1.3000 SR level - the source of the daily tweezers. Going a little deeper on to the 1hr -
You'll see the 4hr 50EMA bearish momentum loss coincides with the 1hr 200EMA retest and again oversold conditions. Despite the Double Top I'd say that the key level now is the intraday 1.2950 level. Any successful bullish break here would likely invalidate intraday bearish momentum from the double top.
Now let us look a little wider -
The weekly is looking VERY bullish. We have a pretty obvious low test on the 50EMA and oversold conditions going back to mid-August!
As you can see, from a purely technical perspective, direction isn't as obvious as the daily chart first suggests. In fact, you might even be more inclined to go long.
Why the bearish arrow then?
Last week ended with some very important fundamental figures for both the US and Canada. In particular the Non-Farm Payroll and Employment change. The US NFP rate was worse than expected, whereas the Canadian employment change was MUCH better than expected. It is my opinion that this will cause a short term drop in the USDCAD, but considering greater market forces such as the FEDs current interest rate stance, and the bullish technicals on almost all other time frames, I don't see the bears making it past 1.2800, where the daily will likely indicate an oversold condition to match the wrap around timeframes. At this point, if the bears aren't ignored completely, I'd be surprised if the bulls don't come charging.
And that, ladies and gentleman, is how you pool resources to make informed decisions. Sometimes it'll leave you feeling a little unsatisfied. But it's the name of the game. If you're trading for excitement, then go to the casino. You might have better luck.
Where did I go? Who cares. Let's jump straight back in...
Starting simple, just how we like it, let's take a look at an interesting little set-up on the
USDCAD
. It's pretty obvious what we're seeing here on the daily.
A tweezer top candlestick pattern retesting the bottoms of both the 1.3000 SR level and the 200EMA after a break of both at the end of September. Add to this a perfect 0.618 retracement, overbought conditions and MACD convergence, it's an obvious sell! Right?
So why is our investment strategy neutral?
Despite this being my first post in a while, Ive still been lurking in the background. One thing that inspired this post is seeing far too many ideas trying to convince readers with very narrow, single time-frame analysis. So humour me here, open up a separate chart and let us adventure a little deeper and a little wider. Starting on the 4hr chart, you'll instantly notice that price is still trending above the 50EMA and losing bearish momentum. RSI shows oversold conditions. Yet, there is a double top pattern (which is more obvious on the 1hr) against the 1.3000 SR level - the source of the daily tweezers. Going a little deeper on to the 1hr -
Now let us look a little wider -
As you can see, from a purely technical perspective, direction isn't as obvious as the daily chart first suggests. In fact, you might even be more inclined to go long.
Why the bearish arrow then?
Last week ended with some very important fundamental figures for both the US and Canada. In particular the Non-Farm Payroll and Employment change. The US NFP rate was worse than expected, whereas the Canadian employment change was MUCH better than expected. It is my opinion that this will cause a short term drop in the USDCAD, but considering greater market forces such as the FEDs current interest rate stance, and the bullish technicals on almost all other time frames, I don't see the bears making it past 1.2800, where the daily will likely indicate an oversold condition to match the wrap around timeframes. At this point, if the bears aren't ignored completely, I'd be surprised if the bulls don't come charging.
And that, ladies and gentleman, is how you pool resources to make informed decisions. Sometimes it'll leave you feeling a little unsatisfied. But it's the name of the game. If you're trading for excitement, then go to the casino. You might have better luck.
The weekly signs held true and as expected the Bulls came in ignoring all the bearish signals on the daily. Perfect example of why multiple time-frame analysis is important.