Yesterday, OPEC announced its first oil output cut since 2008 (to 32.5 million barrels per day from the current level of 33.6 million), which supported the price of crude oil and pushed the commodity-depended Canadian dollar higher against its U.S. counterpart. How did this price action affect the technical picture of USD/CAD?
In our opinion the following forex trading positions are justified - summary:
EUR/USD
Looking at the daily chart, we see that EUR/USD is still trading between the Monday high and low (in a blue consolidation), which means that our previous commentary on this currency pair is up-to-date also today:
(…) the exchange rate remains under the Monday’s high and the 23.6% Fibonacci retracement, which means that further improvement would be more likely and reliable only if the pair climbs and closes today’s session (or one of the following) above these levels. In this case, the next target for currency bulls would be the previously-broken green zone (around Nov low), which serves as the nearest stronger resistance.
Very short-term outlook: mixed
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed
Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
USD/JPY
On the weekly chart, we see that USD/JPY moved higher and extended gains in the previous week, which resulted in a rally above the previously-broken lower border of the blue declining trend channel and a yellow resistance zone, which is a positive signal that suggests further improvement and a test of the orange resistance zone in the coming days.
Will the very short-term picture confirm this scenario? Let’s check.
From this perspective, we see that the CCI invalidated earlier sell signal, while the Stochastic Oscillator generated a buy signal, which will likely support currency bulls and another attempt to move higher in near future.
Very short-term outlook: mixed with bullish bias
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed
Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
USD/CAD
The situation in the medium term hasn’t changed much as USD/CAD remains above the upper border of the purple rising wedge. Today, we’ll focus on the very short-term changes.
Looking at the daily chart, we see that USD/CAD slipped below the upper border of the blue rising trend channel one again earlier today, which in combination with sell signals generated by the indicators suggests a re-test of the lower line of the very short-term purple declining trend channel. If this support is broken, currency bears will test the orange support zone, reinforced by the Nov 9 low and the 38.2% Fibonacci retracement in the following days.
Very short-term outlook: mixed with bearish bias
Short-term outlook: mixed
MT outlook: mixed
LT outlook: mixed
Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective. We will keep you informed should anything change, or should we see a confirmation/invalidation of the above.
Thank you.
Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief, Gold & Silver Fund Manager
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