USD CAD – Longs positions active for FOREXCOM:USDCAD by LupaCapital

Hello Traders and Analysts,


1. Note

2. Contents

3. Research breakdown

4. Education recap

5. Information on Lupa.

A Note before reading – this is a forecast analysis – based upon our trading strategy. This is tagged long, due to purchasing further increments upon imbalances.

Please do not take this as face value and conduct the relevant investment strategy to successfully trade the probabilities.

Master Key for zones

  • Red = Three Month
  • Blue = Monthly
  • Purple = weekly
  • Scarlet – Four day
  • Orange = Daily
  • Magenta = 8 Hour
  • Grey = 4hour
  • Pink = 1 hour

Attached to this idea I will be tracking the USD CAD and DXY .

Monthly Imbalance

Weekly Imbalances
Below are the imbalances for the weekly, where the previous low 1.19XX had provided the closing wick for the monthly candle close.
The imbalance here is key to understand the rejection and retest of the zone is highly probable.
1. Price closed and matched the May 18th 2015 weekly close – meaning the wick is successfully retested.
2. Price has now hit a pivot point and created a monthly imbalance. Looking to the weekly however, price traded a cluster of candles which shows the ‘battle’ printing indecision – what does this signify? Imbalance trading from buyers to sellers, sellers to buyers – as a imbalance trader – a trade will be placed here before an aggressive addition later.

Further explanation:

3. When forming a sell position rally, base rally, or in a market shift ‘poising’ for a bearish continued market structure, the crucial aspect here is to understand the trading range on the daily and weekly timeframe where the maximum to the pip top of the range identifies with the 1.466 to 1.469X. The significance of this here is purely the closing out of the fractal pattern completing the cycle.

Cross asset relationship between asset crosses
Purple – XAU USD
Dark Blue – US500
The reason for showing this chart here is with Canada and US both contributing to the top ten countries in output for the commodity. The Correlation of using Gold against the Standard & Poors 500 index shows the inverse of the US dollar imbalance as opposed to the SPX bullish imbalances.
Gold is on a correctional imbalance as the Metal is cross correlated using a global investor asset whereas the focus on SPX is focused on the U.S markets.
Monthly View

USD CAD relationship with US OIL and EUR USD.

Again here is another cross asset whereby Oil heavily produced by the USA and Canada a like.

The EUR USD and Oil are both on bullish imbalances, however the imbalance on EUR USD has been confirmed and identified .

Purple – EUR USD

Dark Blue – US OIL

The weekly view and monthly are key to providing inverse correlations and look for pivot , fractals on higher timeframes. In order to fully comprehend why these are crosses are key, looking into the chart shows key structural areas which on USD CAD can show a long probability. However on the Oil chart, can show an identified Selling probability.

I. Weekly view

Weekly view

Fibonacci Extension
Using this pathway build upon how the market cycle repeats, the application of the Fibonacci can be used here to plot next moves for entry areas in conjunction with the higher time frame to use the price path to reach the desired targets.
Using the imbalance and Fibonacci tool also assists with trade management in terms of open interest fee’s and furthermore exposure in short term trend shifts.

Weekly – Fibonacci extension

Daily Fibonacci
The daily Fibonacci pathway shows a completion of the -0.618 target, where price is now consolidating on a smaller timeframe.
A cup and handle pattern is forming on the daily pattern.

What does this show here?
Well the US Dollar has been been seeing a downward move towards a strong imbalance which aligns with the USD CAD zone on the weekly timeframe .
With the Dollar showing weakness and the DXY showing relative weakness, while yes the Dollar is weak.
This important monthly zone will set up a buy/long opportunity where price will reject and consistently create an inverted pattern for example – Head and Shoulders , bull flag . Rejection wick for a false break.

The Loonie has been trading in an exaggerated one figure rut for more than a month from 1.2035 to 1.2160 Most recently an engulfing ending Fridays trading session saw a bullish move to the upside.
With Rising oil prices, which supports the Canadian economy and dollar, are poised against the strength of the US expansion and inflation , keeping the Canadian Dollar poised for strength.

The chart below shows that a cross-asset comparison compares
USD/CAD – Grey
USOIL – Orange
Dollar Index – Blue

These are based on the weekly timeframe and without adding imbalances – the price lines both have noticeable – negative correlation and align to the imbalances upon the monthly. (charted in light blue).

Do you enjoy the setups?

  • 10 years combined analysis experience in capital markets
  • Focus on technical output not fundamentals
  • Position and swing trades
  • Provide updates where necessary – with new updated ideas tracking the progress.

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