Commodity prices have been falling for quite a while. Once upon a time the price of oil hovered around $115 dollars per barrel, now today the same barrel costs less than $50. Even before this harsh decline back in 2014, demand for oil had been weakening due to China’s slowdown. Only a few days back we saw a very sharp decline in the price of Gold. The strengthening US dollar combined with a potential interest rate hike by the FED were the recipes needed for Gold to plummet mercilessly trading to new yearly lows.
The commodity pairs have been hit heavily by this move. No prisoners were taken, but there was a selection of trading opportunities presented.
We saw the USCAD appreciate in such a robust fashion. The fall in Gold weakened the Canadian dollar against the USD but at the same time, Gold being inversely correlated to the USD further strengthen the USD against the CAD. The additionally interest rate cut by the BoC has made this pair very bullish fundamentally. Technically the USDCAD favors the bulls. There was a weekly breakout above the 1.2800 resistance followed by a hefty move to the 1.3000. Coincidently this level was also resistance back in 2008. A solid monthly close above 1.3000 may open a path to 1.3500.
USDCAD on the daily timeframe is also very bullish. The attributes of an uptrend hold very well. We can see higher highs and higher lows. Prices have not traded below the prior lows which, in this case, would be the 1.2900 support. Not only has the MACD crossed to the upside, prices are above the weekly pivot and 20 SMA. All the technical do suggest that prices may trade to the weekly R1 of 1.309 as long as the attributes of the uptrend hold.
Intraday pre-US open the USDCAD did exhibit some bearish tendencies with prices clipping the daily S1 of 1.2960. The losses were erased and bulls came back once the unemployment claims were released in the States. Fewer people were claiming unemployment and the actual forecast beat expectations. We have intraday support which still holds at 1.2950 and resistance at 1.3050. The breakout strategy may be the best technique in the scenario.
Whilst the USDCAD trades up, the AUDNZD slowly sinks deeper. The last line of support is the 1.100 level which defended bull’s mid-July. Both the AUD and NZD are commodity pairs but since the RBNZ rate cut decision yesterday, the NZD has appreciated somewhat against the AUD. On the daily time frame, the technicals do suggest a potential turning point. The attributes of an uptrend hold as long as prices keep above 1.1000, but prices are trading below the 20 SMA. The MACD has crossed to the downside and prices reside below both the monthly and weekly pivot. A solid daily close below the 1.100 may be the green flag which would signify the start of a bearish trend.
Intraday the AUDNZD is bearish. We have lower lows and lower highs. The intraday trend defining level remains at 1.1150. A breakdown below 1.1065 will create a new lower high which would be the 1.105 level.
We will recap on both the USDCAD and AUDNZD early in tomorrow’s trading session.
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