USDCAD and USOil, H4 and Daily
USOil prices reached an overnight high of USD 57.44 per barrel. The 4-day run higher in Oil prices, after a period of sharp declines, has helped the Canadian Dollar find a toehold. The contract has been supported by talk of a proposed production cut into year-end by OPEC and Russia, which was the main drive of yesterday’s sharp move higher, ahead of the December 6 meeting to be held in Vienna.
Bloomberg reported that Russia is in wait and see mode with regards to production cuts, quoting Russia energy minister Novak as saying producers need to “better understand both the current conditions and the winter outlook” before agreeing to cuts.
WTI crude is softer today, with prices having fallen back to levels just under $57 per barrel, after a 4-day rebound phase. Meanwhile USDCAD has retreated around the day’s Pivot Point at 1.3170 after pegging a 3-session high at 1.3202 yesterday. This puts Friday’s 12-day low at 1.3126 back in the scopes.
In the daily time frame, the cross has been seen moving within an ascending triangle since mid October, rebounding yesterday away from its lower trend line. As the price holds above the rising trend line, USDCAD remains in strong bullish sentiment in the medium picture. Only in case of a penetration along with the break of 20-day SMA and 23.6% Fib. level since October’s dip, would it find a Support level within 1.3065-1.3078 area (38.2% Fib. level and 100-day SMA.)
Currently however, the market seems to be in a bullish mode overall, given that USDCAD is still trading above all the daily SMAs and with momentum indicators holding in the positive area. RSI has flattened above neutral and MACD dropped slightly below the trigger line, but remains well above zero line. Hence despite the fact that in the long term bullish bias holds strongly, in the near future, some consolidation is possible based on the flat RSI and small decline in MACD but also on the fact that 100 and 50 day SMA have been flattened in the daily chart. Resistance to the upside is set at yesterday’s high at 1.3200.
A jump above this resistance level could meet November’s high of 1.3263. Further increases could move the price towards the 1.3300-1.3320 area.
As CAD and Oil are vulnerable to the possible OPEC plans to cut production, any remarks today from officials attending the OPEC-JMMC meeting, will weigh on the two assets. Nevertheless, BoC Wilkins speaks later today as well.
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Andria Pichidi
Market Analyst
HotForex
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