Bearish Trend
The loonie is inside a bearish strong trend, we can clearly see it in bigger timeframes such as weekly and daily, now let s analyze the h4 chart:
the price is capped by the 200 sma and is in the Supply zone (the orange rectangle), this zone is really strong because we see that it worked perfectly several times, in addition the stochastic has created the so-called Hidden divergence that shoudl push down the price, I will keep a bearish view until the bearish trendline and the moving average will not be broken and I expect the pair to go don to make new lows.
Fundamentally we can notice that in last months oil prices went up and they are highly correlated with the value of the Canadian dollar wich is one of the main exporters, in addition yesterday Deputy governor Toni Gravelle highlighted that the reduction of monthly asset purchases is coming, and traders are now speculating that it could as early as April 2021. Gravelle stipulated that the process would be slow with gradual reductions in purchases in provincial debt, corporate debt and the main government bond programs. This tapering is likely to appreciate the value of the CAD, besides the Federal reserve will keep on suppporting the economy and the dollar will be under pressure again due to the fact that in the second part of the year the Inflation will not grow as high as expected previusly.
the price is capped by the 200 sma and is in the Supply zone (the orange rectangle), this zone is really strong because we see that it worked perfectly several times, in addition the stochastic has created the so-called Hidden divergence that shoudl push down the price, I will keep a bearish view until the bearish trendline and the moving average will not be broken and I expect the pair to go don to make new lows.
Fundamentally we can notice that in last months oil prices went up and they are highly correlated with the value of the Canadian dollar wich is one of the main exporters, in addition yesterday Deputy governor Toni Gravelle highlighted that the reduction of monthly asset purchases is coming, and traders are now speculating that it could as early as April 2021. Gravelle stipulated that the process would be slow with gradual reductions in purchases in provincial debt, corporate debt and the main government bond programs. This tapering is likely to appreciate the value of the CAD, besides the Federal reserve will keep on suppporting the economy and the dollar will be under pressure again due to the fact that in the second part of the year the Inflation will not grow as high as expected previusly.
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