Technical Analyst, Saxo Bank
Summary: USDCAD forming triangle corrective pattern in uptrend
AUDCAD uptrend likely to be extended
NZDCAD correction over and set for higher levels
CADJPY downtrend exhausting - for now. Likely to resume after a correction
EURCAD strong uptrend testing key resistance levels
Medium term: USDCAD is in a correction phase. Underlying sentiment is bullish with all moving averages rising and RSI positive and no divergence. USDCAD seems likely to break bullish out of triangle pattern mentioned above. If the bullish scenario plays USDCAD would be set for a move higher to 1.4265 -1.4442
However, if USDCAD closes below 1.3225 a sell-off down to 200 weekly SMA should be expected with a possible dip down to the lower rising trendline.
AUDCAD has reached 1.764 projection of the recent correction but with no RSI divergence the uptrend could be extended to the 2.0 projection at 0.9618 where we are likely to see a correction.
To reverse the uptrend a close below 0.9260 is needed
Medium-term there could be further upside. Resistance at around 0.9515 is taken out. AUDCAD is on course to previous peak just below 1.00. Some resistance at around 0.9730.
NZDCAD medium-term correction seems to be over and the pair is set for a move higher. If NZDCAD breaks above 0.88, which the positive RSI indicates it will, next resistance and the 1.382 projection at around 0.90, and resistance at around 0.9255.
For NZDCAD to reverse the uptrend a close below 0.83 is needed.
CADJPY For several weeks RSI has been showing divergence strongly indicating the downtrend is exhausting. If CADJPY breaks above its short-term upper falling trendline a swift move to resistance at around 101 is likely.
However, the swift upwards move could be short lived. Medium-term the trend is down and if CADJPY is rejected at 101 or exhaust prior to reaching that level the downtrend is likely to resume pushing the pair to test support at around 92.60 possibly lower to the 200 weekly SMA below 90.
If CADJPY can close above the 55 weekly SMA and above 101.20 a new medium-term up trend is likely to be developed.
RSI divergence explained: When instrument price is making a new high/low but RSI values are not making new high/low at the same time. That is a sign of imbalance in the market and an weakening of the uptrend/downtrend. Divergence or imbalance in the market can go on for quite some time but not forever. It is an indication of an exhaustion of the trend
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.