A focus on Commodity Currencies


The CAD continues to gain on the USD, just 100 pips away from parity. The pair recently bounced several times off of the 50-period EMA on a weekly chart. Over the past few years, the 50 EMA has successfully contained the pair. In 2004, the pair crossed below the 50 EMA, and then retested that level in early 2005 (point A), before continuing its drop from 1.27 to 1.09. At point B, the pair briefly crossed above, but failed to rally. At point C, after multiple attempts to break through throughout 2008, the pair succeeded in changing direction, testing the 50 EMA before rocketing upwards. In 2009, the dollar again fell against the CAD, bouncing off the 50 EMA (point D) before dropping another 1700 pips. As the USDCAD pulls away from the 50 EMA it is likely that the CAD will continue to gain on the USD.


After rallying substantially in 2009, the NZD has consolidated over the past 10-12 months, forming a bull flag pattern. This pattern suggests that the uptrend is poised to resume. The NZD broke through the upper line of the flag in August, and pulled back to test the breakout in September (point A). The past few weeks we have seen a strong rally ensuing, and expect the rally to easily break through the 2009 highs.


After rallying up to the August resistance point of 82.90, oil sold off on Thursday, suggesting that resistance was likely to hold. However, Friday’s long candle wick seems to have shaken out the shorts, with oil rallying right back up to the resistance line. It now seems ready to break through. A strong push on Monday could propel oil across. The next resistance point is around $87.

Written by bforex.com