The Weekly Update: Focus on CAD and Bitcoin

The Bears are Here

Our technical models are finally turning bearish for the Canadian Dollar and a new projection has been set for Bitcoin.

We would first like to refer to last week’s weekly market update. EURUSD bullish technical projection remains valid as the pair gained a little over 100 pips at the time of this writing. Crude oil short entry target has been triggered, offering a decent profit for the traders that capitalized over the short-term reversal. The Bank of England (BOE) members did attempt to counter GBP bullish momentum as we expected but the US Gross Domestic Product (GDP) disappointed, sparking a mass USD selling in the Forex market.

Bearish Against most Currencies

Our technical model is suggesting to short the Canadian Dollar (CAD) against a basket of currencies. After analysing CAD against multiple currencies (CADCHF, GBPCAD, EURCAD etc.) we are yet to determine the quality of the signal, a temporary correction or a significant trend reversal. Another concern is the upcoming Non-Farm Payrolls where we do not wish to be over-exposed the market volatility.

USDCAD Weekly Chart

Please click on the chart to enlarge:

USDCAD Weekly Chart in the FX Markets

USDCAD Weekly Chart

After a long study we have decided to focus USDCAD and GBPCAD. We have decided to eliminate CADJPY and CADCHF. USDCAD provides a decent entry with a fair Risk Ratio (RR). GBPCAD offers a deeper protective stop due to its volatile nature and a disproportional RR. When we sought fundamental support, end of month FX flows are pointing towards US Dollars selling, which in a way contradicts our expected gains in USDCAD.

To conduct a decent risk management, we have decided to focus on USDCAD for potential gains bearing in mind the pair may be pressurized by the FX flows. The Canadian GDP, due on Monday at 12:30pm GMT will be the ice breaker for the long trade. We are taking our entry from the market price (once the spread normalizes), layering our protective stop at 1.0562, targeting 1.0867.

Bitcoin Technical and Fundamental Analysis

Following the recent weakness in Bitcoin (BTCUSD) price the weekly chart indicates a reversal is due to take place. There is a fair possibility we will see the price surge to over $900 but our initial target is at $700. From a fundamental angle, California Governor, Jerry Brown, has affirmed Bitcoin and other alternative currencies (Altcoins) are now authorized by the state over the weekend. We believe other states and/or countries will follow suit, catalysing the our bullish projection for the digital currency.

Bitcoin is trading at $589.39 at the time of this writing.

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Key Economic Figure

Naturally, the upcoming Non-Farm Payrolls will be the centre of attention this week. We paid great attention to the fact the Fed reduced its Quantitative Easing (QE) operations by lower than anticipated. We are closely monitoring US data in order to find the reversal entry to the US indices. Many analysts have attempted to short the SP500 or DJ30 but without a great success.

If you are considering to trade any of above trades please ensure you have read our risk disclaimer. Do ensure to follow this post as any updates on the above analysis (CAD and BTCUSD) will be posted here.

30/06/14 UPDATE: Post Updated

30/06/14 UPDATE II: Bitcoin is trading over $622 at the time of this writing, the CAD weakened against a basket of currencies as expected.

01/07/14 UPDATE: Bitcoin is maintaining its bullish trend as expected, trading at $651.96 at the time of this writing. The Canadian Dollar is moderately weaker against GBP, USDCAD is stuttering but our bullish outlook has not been revised for the pair.

03/07/14 UPDATE: USDCAD trades above 1.0670 at the time of this writing due to the US Non-Farm Payrolls, inline with our market analysis.

08/07/14 UPDATE: USDCAD has gained nicely and is trading at 1.0682 at the time of this writing. Bitcoin is still trading above $600 but gave some of its  earlier gains.

11/07/14 UPDATE: USDCAD is trading marginally higher following the Canadian employment figures, ensuring the trade is in a decent profit. We believe current level (1.0685) should be used for profit liquidation and shifting the protective stop order to the entry.

16/07/14 UPDATE: USDCAD long trade is in a decent profit (over +90 pips) at the time of this writing. Protective stop order should be shifted to 1.0698 and realize another partial of the open trade.

17/07/14 UPDATE: USDCAD is poised for a moderate correction. We are exiting the trade at current price 1.0734 (+70 pips approx.). Bitcoin is failing to break higher. We suggest to begin liquidating partials for Bitcoin at current levels ($617).

19/07/14 UPDATE: Bitcoin is trading at $624 at the time of this writing. We are concerned by its tight range and decide to liquidate most of the long trade at current price, leaving only 10% of the trade in the market.

31/07/14 UPDATE: We are uncomfortable with recent weakness in Bitcoin despite the fact a small partial is in the market. We are layering our protective stop loss order at $550.

26/08/14 UPDATE: With a slight delay, Bitcoin triggered our protective stop loss order. However, we have already liquidated 90% of the trade with a decent profit (+$24 approx.)

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Last Updated on November 22, 2014