USD to CAD 6th April Daily Candle Chart
The hanging man and shooting star on last week’s daily chart for the usd to cad pair, was subsequently confirmed on Thursday with a widespread down bar and on Friday with a further down bar, the latter of which also included a long upper wick which failed to hold above both the 9 and 14 day moving averages, suggesting that the bearish sentiment has now been re-established. This view is confirmed by the fact that prices are now back below all three moving averages and the only issue is whether support at the 1.2197 will hold, and if not we could see a retest of support in the 1.2071 with a possible move back to 1.1783 and all the above is supported by the weekly chart which shows 2 shooting star candles in the last 4 weeks.
This week’s trading in the usd to cad pair is dominated by a number of important fundamental news items in the economic calendar, the first of which will be released shortly with the month on month building permits data, followed this afternoon by the Ivey PMI data. Building permits data measures the change in the total value of new permits issued and provides an excellent guage for future construction activity since this is one of the first steps for building new homes. The forecast is for -3.6% against a previous of -4.6% and in the last three months we have seen a gradual improvement in this figure. If the actual is better than forecast then this will be seen as good news for the Canadian dollar. The other item of fundamental news today is the Ivey PMI data which is considered a leading indicator and is based on a survey of around 200 purchasing managers who are asked for their views on the economy and to rate certain elements including new orders, prices etc. The forecast is 46.7 against a previous 45.2 and what is interesting about this data set is that it is now approaching the 50 mark, above which the economy is considered to be in expansion. This index has been steadily increasing since January of this year as it approaches this psychological level.
If both of these numbers come in on target, or better, we should see a strengthening of the Canadian dollar and my suggestion for today is to look for selling the US dollar in the hourly charts, in particular looking for shooting star candles, dojis and combinations thereof.
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