Tuesday, September 10, 2019 6:00 PM EST
Crude broke out above the downward sloping trendline of a triangle today. However, it also closed down 0.28% on the day. After breaking out, Crude turned lower on the day and moved back into the triangle, in negative territory for the day. This candlestick is a doji candle and is considered to be a candle of indecision.
(Click on image to enlarge)
Source: Tradingview. FOREX.com
In contrast, USD/CAD continued its moved lower today (CAD higher) from the bearish engulfing candle put in last week. The pair is hovering around the 61.8% retracement level near 1.3148 from the July 19th lows to the September 3rd highs. Trendline support comes in roughly 50 pips lower near 1.3100.
(Click on image to enlarge)
Source: Tradingview, FOREX.com
Crude and CAD typically move together, that is, when crude trades lower, USD/CAD trades higher (CAD lower). However, today, as Crude reversed lower, CAD did not. To better illustrate this, below is a chart of WTI Crude and Canadian Dollar Futures (the futures trade in the same direction as Crude, as opposed to USD/CAD which trades inversely to crude). The correlation coefficient for the two assets is currently +.62.
(Click on image to enlarge)
Source: Tradingview, FOREX.com
What happens tomorrow if Crude reverses its recent move higher and trades lower back into the triangle? The Canadian Dollar may trade lower with it (USD/CAD trade higher).On a 240-minute chart, price is diverging from the RSI, which is typically a signal of a potential reversal. Horizontal resistance and Fibonacci retracements come in between 1.3230 and 1.3260. As mentioned in the daily chart, support is near 1.3100.
(Click on image to enlarge)
Source: Tradingview, FOREX.com
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Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
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Oil prices are stabilizing and may rise on Saudi statements and as people realize that big oil is no longer looking to drill new areas as much as acquire floundering small oil companies pumping at losses only to pay for their massive debt load.
Thanks @[Moon Kil Woong](user:5208), what kind of time frame do you think we are looking at for a rise in #oil?
Sorry for the late reply. I think we are looking for oil to stabilize first. We might see a decent upward trend after Q1 next year. The issue is that oil has slid because they don't see it rising in the near term.
Thanks for answering my question Mr. Woong.
Agreed.