USDCAD Analysis October 2015 (W,Y)
Created on Thursday, 01 October 2015 05:39
Written by Austin Galt
Price has traded a touch higher since the previous analysis putting in a high at $1.3458. Let’s now review the weekly and yearly charts.
USDCAD WEEKLY CHART
The Bollinger Bands show price having another crack at getting back to the upper band. This attempt looks set to fail but not by much.
The PSAR indicator retains a bullish bias although we can see the dots becoming quite steep which often signifies the uptrend is nearing its end.
The RSI shows multiple bearish divergences in place while both the Stochastic and MACD indicators are bearish.
I have added moving averages with time periods of 50 (blue), 100 (red) and 200 (black) which are all in bullish order. However, the averages have started to diverge quite a bit and I’d like to see price retreat in order to bring the averages closer together.
Now, I may be being a bit presumptive but I suspect a 5 point broadening top formation is in play with the point 3 top in the process of forming if not already in place. These formations are generally easier to spot after a point 4 low is in place but I just have an inkling that this is what is occurring. Time will tell.
If the 5 point broadening top is indeed taking place then the point 4 low will need to be below the point 2 low which is denoted by the horizontal line and stands at $1.1917. After that price should head back up to new highs as it searches for a point 5 high.
Let’s now looks at the big picture yearly chart to put things in perspective.
USDCAD YEARLY CHART
There doesn’t appear to be an established trend looking at this chart. The action looks choppy. Within this choppiness, price looks to be headed up over the next few years.
The PSAR indicator has a bullish bias after price busted the dots on the upside this year.
The Bollinger Bands show price trading above the middle band and while I expect price to eventually reach the upper band I favour more work being done around the middle band. This middle band currently stands around $1.17 and I favour price dipping below this level before resuming higher once again.
The Stochastic indicator is bullish although the averages look to have diverged somewhat and price moving back down temporarily would fix that.
I have added Fibonacci retracement levels of the whole range and I am targeting price to trade up to at least the 76.4% level which stands at $1.4507. The 88.6% level at $1.5375 is also not out of the question.
Summing up, I believe an intermediate term correction is now upon us that will take us into the end of the year and into 2016.