The Weekly Update: CAD Technical Strategy Ahead of OPEC

EURUSD Rally

The German IFO Business Climate came in at 117.5 (historic highs), which prompted strong gains across EUR pairs and crosses. As it was the only key economic data for the daily the Euro was able to extend its gains against a basket of currencies, triggering numerous stops in the market. It is a fairly common phenomena when minimal economic data is due for a given trading day.

EURUSD weekly close has invalidated the medium-term downtrend for the pair, however, there is no indication an uptrend has been developed. EURUSD requires to post a weekly close above 1.2090 in order to affirm further gains are in store.

The main focus until the end of the year will be on the brexit negotiations and the Fed monetary policy. It is too early at the time of this writing to determine whether Germany will head for snap elections. Some clarification should be provided by the end of the week.

EURNZD Strategy

We may have a short entry in EURNZD, however, due to our current market exposure opting for EURNZD will be reckless. As it is a weekly entry the required stop exceeds 200 pips, which will leave us over-exposed to the market.

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The Weekly Update: CAD Technical Strategy Ahead of OPEC

EURNZD Weekly Chart 26/11/17

Based on EURAUD weekly close we cannot determine whether the corrective weakness may begin this week or following the monthly close towards the end of the week. There is some correlation between EURAUD and EURNZD but it is possible for EURNZD to retrace lower without EURAUD.

The RBNZ Financial Stability Report is the key event for NZD pairs and crosses.

CADJPY Signal Strategy

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The Weekly Update: CAD Technical Strategy Ahead of OPEC

CADJPY Daily Chart 26/11/17

We have been monitoring CADJPY for some time. We were waiting for a lower price in order to consider a long trade in the cross. We were also concerned with increasing our exposure to the Japanese yen (JPY) but based on the weekly close AUD may correct higher due to a firm AUD. We are also weighing the possibility of strong commodity currencies (AUD, NZD and CAD).

Canada’s employment data is due on Friday, however, the corrective gains we are expecting to see in CADJPY may begin during the week. Initiating a fourth trade is on the verge of our risk tolerance. The only reason we are opting for CADJPY and not EURNZD is due to the size of the required stop. Daily entries will often require tighter stops than weekly entries.

CADJPY Trade Alert

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The Weekly Update: CAD Technical Strategy Ahead of OPEC

CADJPY Daily Chart II 26/11/17

CADJPY long at market price (ask 87.81)
Take profit: 90.24
Protective stop: 86.64
Risk Ratio (RR): 1 : 2.0 (approx.)
Estimated duration: 14 days (approx.)

Note: The potential drawdown is a re-test of 87.00, which is the weekly support.

01/12/17 UPDATE: CADJPY is trading at 88.18 at the time of this writing, we are closing 20% of the long trade at market price.

03/12/17 UPDATE: We would like to first remind that CADJPY was based on a daily entry as opposed to EURAUD and AUDJPY. We did mention that we would rather not rely on the Canadian employment data. The spike on Friday followed by the gap at the opening of the market limits our ability to shift the stop to a more desired price level.

The BOC monetary policy may lift CAD higher, however, as liquidity will gradually become thinner we prefer to limit our exposure to JPY. Had this was EURCAD we would have probably remained in the trade.

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The Weekly Update: CAD Technical Strategy Ahead of OPEC

CADJPY Daily Chart 03/12/17

CADJPY is trading at 88.72 at the time of this writing, we are closing the long trade at market price. We chose not to wait for the spread to stabilize.


AS THE OBJECTIVE OF THE STRATEGIES HAS BEEN MET THE ANALYSIS IS NOW ACCESSIBLE TO ALL TRADERS


The Weekly Update: CAD Technical Strategy Ahead of OPEC

The Weekly Update: CAD Technical Strategy Ahead of OPEC