Transcript of Video
Hello everyone, this is today’s video analysis for February 22, 2019. Today we’re looking at the US Dollar versus the Canadian Dollar [USDCAD] for today’s trade analysis.
Before I begin the analysis, of course it’s important for me to recognize in about a half hour or so from the recording of this video, we have some news coming out of Canada. Retail sales hitting at 8:30 Eastern US time. Again, about 30 minutes from the recording of this video. So, that could change things a little bit in the next 30 minutes.
But for the time being, let’s take a look at what’s been happening and we might expect to happen. Of course we had the freefall right here, where the market went down from the highest high into the mid-1.3600s all the way back down into the 1.3055, 1.3070-level, the yellow-shaded area down here. Been rising a little bit and then falling a little bit over the past couple of weeks.
Let’s go back in time along this green zone. Green zone being 1.3225, 1.3205. Falling back in time, black circle. You could see support into that area before. So, we know that historically that this green-shaded area, 1.3225, 1.3205 has been support before. So, as long as it stays above it or gets above it and stays above it, we look for support. And of course underneath it, we’d look for the market to go lower.
Let’s go ahead and zoom it in a little bit. So, we’re looking at two things. Either the news is negative for Canada. Negative news for Canada would send this currency pair higher. Positive movement for the USD. If we see the USD rally today, we would look for this to go higher. So, that’s something that we will watch. Negative news. Retail sales being worse than expected. Positive USD movement would send this back up towards the yellow zone, orange zone, or higher, potentially reversing the trend back to an uptrend.
Good news out of Canada. If retail sales are much better than expected or the USD sells off, we would look for this to get back under the green zone, head back down towards the pink zone or lower. So, those are some of the things we’re looking for right around this green-shaded area, 1.3205, 1.3205.
Another caveat that we also throw into the mix is crude oil. Crude oil has been on the rise. Take a look at this. Rising strongly. Higher crude oil prices, good news for Canada, and we would typically look for on a rising oil price the USDCAD to move lower. But take a look. We’re at significant resistance here. 57.70, 58.30. You go back in time. Blue circle. Left-hand side of the chart. We see resistance there before.
So, crude oil matching into a resistance. If it falls off of that resistance and goes down, we would also look for the USDCAD to go up. Whichever way crude oil prices go, we look for the USDCAD to do the opposite. So, if this falls off strongly, we would look for the USDCAD to potentially go up. The perfect storm is of course there’s three legs to that stool there. Crude oil being part of the strength or weakness of the CAD. The Canadian news coming up. Retail sales at 8:30 Eastern US time being part of the strength or weakness for the CAD. And of course the USD strength and weakness.
We see the USD index today pressuring back above what has been resistance for the past two days. 96.55, 96.45. So, all three of those components have a potential impact on the USDCAD. If all three of those components line up correctly, let’s say falling crude oil, bad retail sales for Canada and positive USD movement, we’ll likely see this go back up. The opposite is true as well. If we see falling USD, we see rising crude oil prices, and we see good retail sales out of Canada, we could see this break back through the green zone and head back down.
Now, if there’s a mix of all that, it could be a little bit more confusing. So, at least you have some things to look for at least in the next 25 minutes or so. Watch the news out of Canada. See how that plays out. Keep an eye on crude into resistance and the USD pressuring above support, and that may give us an opportunity around this green zone, 1.3205, 1.3225 for the USDCAD today.
From Forex Traders Daily, this has been your daily analysis with Ross. If you would like to get Ross’ analysis on all the currency pairs he’s watching and all the trades he takes today, join him in his live Trade Room by clicking on the link below. Please leave any comments you have about today’s video in the comment section below.