NY Evening Forex Commentary for June 6th 2011

The Midday Forex Commentary for June 6th 2011

USDCAD tests intraday 38.2% level

The USDCAD will be tied to oil and oil is volatile but the price has continued its move higher today. In the chart above the pair is testing the 38.2% of the days range which could provide trend resumption clues. If the level holds, the pair could see some additional upside potential.

On the daily, the trend down is still in charge, as the price remains below the upper trendline in the chart below. That level comes in around the 0.9711.  Is it possible to get there? Of course. Last month the price was at the level. The non trending nature and break out over the last few days is a clue that corrective moves are in place and it could trend.  So be aware.

PS Canada Ivey PMI due with expectations of 65.

USDCAD corrects higher but so far the gains are limited

The USDCAD has extended to the upside and tested the 38.2% retracement of the move down from the April 15th high to the low on April 21st. The level comes in at 0.9555.  A move above this level will be eyed by the bottom picking buyers as confirmation of further upside momentum. A move above would target the 200 hour MA at the 0.9575 (green line) and then the 0.9586 (50% of the same move down).

Until a break, however, the bears remain in control. Oil prices at $112 per barrel should keep the pair supported.  The 100 hour MA (blue line) at 0.9523 is the target support that if broken will put the bears back firmly in the driver’s seat – once again.

Looking at the daily chart, the price on Thursday touched the channel support line and bounced.  The ability to hold the level was good news for the dip buyers. However, the correction has been somewhat contained.  This keeps the bears in the pair in control.

When a pair trends like the USDCAD, the burden of proof remains on the bulls to force the pair back to the upside. As a result, getting through the 38.2% of the most recent move down (hourly chart above) will be eyed by market traders as the new trading day begins.

USDCAD inches higher on weaker Canada Building Permits

The Canada Building Permits came in at -5.1%. Residential Permits came in at -0.9% and Non Residential Permits fell -13.3%.

The USDCAD has inched higher on the weaker data. Higher oil prices due to the Mideast tension has kept the Canadian dollar supported (USDCAD down). The 100 bar MA on the 5 minute chart comes in at the 0.9712. The 38.2% of the move down today comes in at the level as well. A move above this level is therefore needed to give intraday bulls confirmation that a low is in place. The next target would be the 0.9719.

USDCAD hits first target and at 0.9755 and comes off

In the prior post, I outlined the bulish bias in the USDCAD after the BOC interest rate decision and move back into the downward channel.  The first target being the topside trendline at 0.9755. The USDCAD did move higher and ran into resistance at the 0.9755 level where sellers emerged. SEE PRIOR POST BY CLICKING HERE. 

Now with the target reached, the pair is back firmly within in the channel.

The move higher that took the price from 0.9682 to 0.9754 has retraced less than the 38.2% of that move. As long as that dynamic can remain, the upside remains the intraday bias with the potential for a move above the topside trendline.  I will therefore look for buyers on dips against the 0.9727 level.   Additional support comes in at the 0.9718 level. This is the midpoint of the days range and the London morning high area.    This would keep bulls somewhat in charge but would lessen the bias a bit for the pair. 

Clearly a move above the hourly trendline at the 0.9754 area is needed to keep momentum moving to the upside.

USDCAD moves initially higher on BOC decision

The BOC kept there rate unchanged today at 1%. The pair has moved through trendline resistance at the 0.9714 level and this will now be watched as short term support by intraday traders looking for a temporary bottom in the pair. The upside target is channel resistance at the 0.9755 level. A move above that targets teh 0.9788 level.

USDCAD back down at support

The USDCAD tested the 0.9849 level on the move back above the old low at 0.9830 but could not break through. With the dollar selling, the USDCAD has sold off too. The price is back down testing the 0.9830 level.  Will buyers come in at the level?  The risk is limited, and so is the range.  Above 0.9850 or below 0.9830?

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