Canadian dollar sees fresh sell signal

This is the third sell signal I have seen in the Canadian dollar (FOREX:CADUSD) since the trend has changed back to down in mid-October on the daily chart. I especially like this this sell signal because the Canadian hit the 20-period moving average, which has traders taking profits, then it took out the lows for the past two days, which also brings in more sellers. The Canadian dollar also had an outside day that is bearish. An outside day that is going with the trend after a correction is one of my favorite trades .The weekly chart has been trending down for some time. Although it is a little over sold, the trend is down and I think we should have at least 2-3 weeks of follow through.

See Chart

The Canadian has had a five-day counter trend rally. The recent rally in gold was short lived, and I have a sell signal in gold today; it looks like it is resuming its trend back down. The energies seem to be slowing. As far as going up, I was close to having a counter trend sell signal today in the crude oil. For the next week, crude will be in a pivotal area.

The Fed should announce if it is going to tapper next week. If this does happen, the Canadian dollar should sell off. I have support at 9300, 9200 and it could go as low as 8600 long term.

About the Author
Larry Baer

Larry Baer is a senior broker with Zaner Group. He has been in the futures industry for 30 years and his prior experience includes a membership at the Chicago Board of Trade.  During his 10 years on the trading floor, he traded and managed a futures and options operation, which serviced both retail and institutional clients.  He is also the author of “The Trader's Tool Box.”  He may be reached at lbaer@zaner.com and  312.277.0112.

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