Chart Of The Day Update: Canadian Dollar Alert On GDP

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Chart Of the Day Updates

Canadian Dollar Alert On GDP

In the overnight session Asian stocks were mixed again, with the Nikkei and China closing in the green, while the HIS ended the session lower by 0.28%. 

During that time the U.S.dollar fell against the major currencies as the dollar index bounced from the 77.20 resistance area that was established at the start of this week. The U.S. currency weakness was also shown later in the European session, when the German DAX traded up to 5744 daily highs, in a  move that shows risk tolerance is still in play on the last trading session of the month.

The reason for the recent dollar decline is aided by the commodity market, where gold bounced from the $985-$990 support region to the current spot price around $1000 per ounce. At the same time oil is trading around $1.50 above the previous weekly close.

If these circumstances hold USD\/CAD should be going lower over the coming sessions or days, approaching to new lows, especially if the 1.0658 support from the 22nd of September 2009  is taken out.

Today at 8.30 EDT the GDP report for Canada will be released, which is expected to be higher at 0.4% compared to the previous 0.1%. If the expectations are correct, then we may see the Usd/Cad pair quite quickly back down, around 1.0589 yearly lows.

Oil 4 Hour Elliott wave chart ( chart detail)
4 Hour chart trend: Short. Main price points: 63-64. Looking for: Extended wave iii

On the four hour oil chart, prices are still trading around the 38.2% retracement area, discussed yesterday, where the top of a blue wave iv) may be reached. The current wave count structure signals for another push lower in the coming days with wave v), which should complete an extended black wave iii somewhere around the 63-64 dollars per barrel. After that we will be looking for a long pull-back in a black wave iv, before the down-trend continues.

Currently, we are also monitoring the oscillator movement that has made a retrace to the zero line recently, which usually happens in wave two or wave four of an impulse count. In our case this oscillator suggests that the top of a blue wave iv) is near. 

Usd/Cad Elliott wave chart (chart detail)
4 Hour chart trend: Mixed. Main price points: 1.0589, and 1.0658. Looking for: Two scenarios

Usd/Cad is still trading lower, after the 1.0990 highs were hit in the past few days. Yesterday we mentioned that this current move could be just a pull-back of a black wave II) of an extended red wave III, before the up-trend continues. If this is the case then market should make a turning point soon, somewhere above the 1.0658 wave II low. However, we also came out with an alternative wave count, labeled as underlined blue waves a, b and c that signals for a push to new lows.

We have to wait on some major price points to be taken out for a confirmation of which will be the easiest rout to travel, but either way we have the price points covered. A break of 1.0658 will suggest that a, b, c is correct count, which will put new lows in play.