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All about Canada


Jul.09.2014

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The pick of the day is loonie, forex geek name for Mr. Canadian dollar as Ms. USA leads him on the forex dance floor. The pair has been pulling back after reaching a top at 1.12 back in march, dancing below the Ichimoku cloud and now teasing the 38% Fibonacci level in the 1.06 area. With the RSI below the neutrality area we could see more losses below 1.105 with first target set at the 50% Fibonacci level at 1.044 and next target at 1.025.

USDCAD technical analysis fibonacci ichimoku RSI candlestick chart forex FX

Now a break above 1.105 would change our outlook to bullish with further upside movements towards 1.128 and 1.146.

 

On the fundamental side it appears that Canadian data has mostly been strong, with the expected increase in price levels keeping domestic spending supported for now. That also backs our bearish scenario on the USD/CAD forex dance floor. Lets take a closer look at Canadian economy:

 

1- As a commodity-dependent economy, Canada relies heavily on the trade industry’s contribution to overall growth. Their exports jumped to a record high in May, enough to reduce the deficit from 1 billion CAD to 0.2 billion CAD.The gain in exports was led by rising purchases of automobile parts and engines, along with a pickup in sales of consumer goods. Meanwhile, imports fell by 0.3% in May, hinting at a rebound in demand for locally-produced products. Bear in mind that 65% of Canada’s exports are sold to the U.S., which means that this trade recovery could be sustained if  USA continues to do well.

 

2- On the other hand, manufacturing figures from Canada have painted a less optimistic picture, with disappointing PMI being released earlier this week. The employment, inventories, and supplier delivery components all posted lower readings compared to the previous month’s figures. The prices index, on the other hand, printed a higher reading and hinted at better inflation prospects.

3- On the Inflation front, CPI readings did reflect a rise in price levels for May, as the headline and core CPI both printed a 0.5% gain. This is stronger than the estimated 0.2% increase in core price levels and the projected 0.3% climb for the headline CPI.

4- Last but definitely not least is Canada’s spending data, which had promising results for April. Headline retail sales jumped by 1.1%, outpacing expectations of a 0.4% gain, while core retail sales chalked up a 0.7% increase, higher than the estimated 0.4% rise. To top it off, the previous month’s figures enjoyed decent upgrades to show a 0.1% pickup in core consumer spending and a 0.2% increase in headline retail sales.

Wholesale sales, which is considered a leading indicator of consumer spending, also posted impressive figures. Retailers increased wholesale purchases by 1.2% in April, a significant rebound from the previous 0.3% decline and the projected 0.3% rebound. Of course potential gains in spending also depend on the jobs situation, and Canada should provide a clearer picture of this when the employment report is released on Friday.

 

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Intraday Forex Technical Levels

 

 

EUR/USD Intraday: continuation of the rebound.

Invest Diva likes: Long positions above 1.3575 with targets @ 1.364 & 1.366 in extension.

If pair goes nuts: Below 1.3575 look for further downside with 1.3555 & 1.3535 as targets.

What’s up on the forex dance floor: The RSI is supported by a rising trend line. The pair is trading in a bullish channel.

Supports and resistances:
1.3675
1.366
1.364
1.3607 Last
1.3575
1.3555
1.3535

スライド1

GBP/USD Intraday: key resistance at 1.7145.

Invest Diva likes: Short positions below 1.7145 with targets @ 1.708 & 1.7055 in extension.

If pair goes nuts: Above 1.7145 look for further upside with 1.718 & 1.72 as targets.

What’s up on the forex dance floor: The RSI has failed to break above its bearish trendline.

Supports and resistances:
1.72
1.718
1.7145
1.7115 Last
1.708
1.7055
1.7005

USD/JPY Intraday: under pressure.

Invest Diva likes: Short positions below 101.8 with targets @ 101.4 & 101.2 in extension.

If pair goes nuts: Above 101.8 look for further upside with 102 & 102.25 as targets.

What’s up on the forex dance floor: The RSI lacks upward momentum.

Supports and resistances:
102.25
102
101.8
101.6755 Last
101.4
101.2
100.8

スライド3

USD/CHF Intraday: under pressure.

Invest Diva likes: Short positions below 0.896 with targets @ 0.89 & 0.888 in extension.

If pair goes nuts: Above 0.896 look for further upside with 0.8975 & 0.8985 as targets.

What’s up on the forex dance floor: As long as 0.896 is resistance, look for choppy price action with a bearish bias.

Supports and resistances:
0.8985
0.8975
0.896
0.8932 Last
0.89
0.888
0.886

NZD/USD Intraday: the upside prevails.

Invest Diva likes: Long positions above 0.877 with targets @ 0.8835 & 0.886 in extension.

If pair goes nuts: Below 0.877 look for further downside with 0.8735 & 0.871 as targets.

What’s up on the forex dance floor: The RSI is mixed with a bullish bias.

Supports and resistances:
0.89
0.886
0.8835
0.8798 Last
0.877
0.8735
0.871

AUD/USD Intraday: bullish bias above 0.9365.

 

Invest Diva likes: Long positions above 0.9365 with targets @ 0.9445 & 0.9465 in extension.

If pair goes nuts: Below 0.9365 look for further downside with 0.9325 & 0.929 as targets.

What’s up on the forex dance floor: The RSI is mixed with a bullish bias.

Supports and resistances:
0.9505
0.9465
0.9445
0.9398 Last
0.9365
0.9325
0.929

 

USD/CAD Intraday: bullish bias above 1.0655.

Invest Diva likes: Long positions above 1.0655 with targets @ 1.0695 & 1.0725 in extension.

If pair goes nuts: Below 1.0655 look for further downside with 1.0615 & 1.058 as targets.

What’s up on the forex dance floor: The RSI is mixed with a bullish bias.

Supports and resistances:
1.075
1.0725
1.0695
1.0667 Last
1.0655
1.0615
1.058

 Precious Metals

Gold

Short positions below 1332 with targets @ 1285 & 1240 in extension.

Alternative scenario: Above 1332 look for further upside  with 1390 & 1434 as targets.

 

Silver

Long positions above 19.7 with  targets @ 22.17 & 23.05 in extension.

Alternative scenario: Below 19.7 look for further downside with 18.7 & 18.2 as targets.

 

US Index Levels

S&P500

Short positions below 1978 with targets @ 1937 & 1923 in extension.

Alternative scenario: Above 1978 look for further upside with 1986 & 1994 as targets.

Dow Jones

 

Short positions below 17000 with targets @ 16715 & 16620 in extension.

Alternative scenario: Above 17000 look for further upside with 17050 & 17090 as targets.

Nasdaq 100

Short positions below 3918 with targets @ 3808 & 3783 in extension.

Alternative scenario: Above 3918 look for further upside with 3946 & 3962 as targets.

Russell 2000

Short positions below 1183 with targets @ 1156 & 1147 in extension.

Alternative scenario: Above 1183 look for further upside with 1194 & 1211 as targets.

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