The USDCAD has settled between the “Goal Posts” as defined by the 100 and 200 hour MA (blue and green lines in the chart below). The 100 hour MA is at 1.1263. The 200 hour MA is at 1.1215. The midpoint of the month’s trading range comes in at the 1.1233 level – near the middle of the two MA levels.
The USDCAD is trading between the 100 and 200 hour MA now.
When the price settles between the two moving averages, the “market” is regrouping and thinking about the next move. In essence, it is not sure what way to go.
The recent trend has been higher, and because of that the 100 hour MA is far away from the 200 hour MA. However, “something” has caused the price to come down fairly quickly and the break below the 100 hour MA is bearish,but the market is not so sure about taking the next step through the 200 hour MA so fast. It is hard for the market to reverse trends so quickly. Hence the cause for pause, and why we often see dip buyers against the 200 hour MA.
So what was the “something” that caused the sharp move lower?
One thing, is the USDCAD got a push higher this week on the back of weaker oil that took the price below the 80.00 level to a low at 79.10 (see chart below). The price bottomed and has since recovered. It is currently trading above topside trend line (at 82.10) and this is now support for oil (see chart below).
On the currency pair, the price has followed the actions of oil. As oil has gone up, so has the CAD (down USDCAD).
Traders will now take clues on the USDCAD on the break of the 100 or the 200 hour MA. The “market” will make up it’s mind and move away from this happy and neutral area at some point. What will cause the move? Will oil help out? Will a rising USD help? Will some other fundamental news push it? We don’t know. However, we do know, we will get a break outside the Goal Posts. So be on the lookout for the break.
Crude oil has rebounded and is above the 100 hour MA now.
