This is a very interesting situation because all of the technical signals and fundamental signals seem in place for a continuation of the downward trend in USD/CAD. I have played the pair a few times with mixed results. With the most recent U.S. Inventory report this week, and the upcoming summer driving season, the price may yet go higher. If the price continues to climb, USD/CAD could see fresh lows. However, I'm not positive that we will hit 75USD (as suggested by Saudi Oil Minister Naimi) as the demand for gasoline has yet to reach what it was a year ago as stated in the article, but already we are now just over $66 a barrel. On the technical side, the signal for selling USD/CAD was hit yesterday May 29th, when the daily price closed below the 50% retracement level from the last year and a half of the rising dollar. In my opinion, the next level of major resistance, should price continue downward, is the 1.06 region where prices tended to hover near and around for the last two summers, which might make for some decent sideways action for a little while. Nonetheless, I wouldn't be playing any long positions without very tight stops, and certainly not for any extended time until both the fundamentals and the technicals indicate otherwise. On the short side, I missed the move on friday while I was trading other pairs so I will be watching the action next week to spot a decent retracement back up to a decent selling level (say 1.100/1.1060, former support which would now be resistance), if the market provides such an opportunity, with the intention of seeing the 1.06 level or possibly lower.
Please click on the image to see the proper details and please pardon the crudeness of this candlestick chart, as I haven't figured out how to bring up RIM with e-signal (if it's even possible). I have taken this from the TSX website and included MACD, Volume, bollinger bands (red), and a 50 day moving average (maroon). The Fibonacci levels (magenta) are drawn in and calculated by hand so to speak, and drawn the uptrend channel (green).
Fibonacci Study for RIM:
89-44 = 45
0.382 (38.2%) retracement = 89 - 45 x 0.382 = 89 - 17.19 = 71.81
0.500 (50.0%) retracement = 89 - 45 x 0.500 = 89 - 22 = 67
0.618 (61.8%) retracement = 89 - 45 x 0.618 = 89 - 27.81 = 61.19
For Long entries, the 71.81 level is a good level at which to buy, or 75 for more aggressive traders looking to catch a bollinger bounce. Based purely on technicals, the 71.81 represents both the 0.382 or at 38.2% retracement from the recent and rather massive move off the March lows of 2009 (44/45) to the High of 89/90 in May. Also, the 50 day moving average comes in at this level, along with the recent trend channel (marked in Green). Mind you, if this level is broken with strength, it would be a bearish signal (look for further weakness) and the price may attempt to revisit 61/60 which would be a 50% retracement of the recent uptrend. If I were planning on buying, I would probably be watching the price very closely if it moves below 75 in the next week or two. I may liquidate my position if it goes below, and cut my losses. If the price holds at 70 or above, a move which follows the top of the trading channel could see the price move near 100, and if this channel is broken with strength, we may see another power move of 20 or so points into the 120 area, based on the recent break of 60 - 80 at the beginning of April. This is purely technical and I haven't even begun to digest the fundamentals that I have been researching. Any significant move to the upside would certainly hinge on some positive news for both RIM and the global markets, and the same goes for the downside respectively; the future is still murky right now so naturally be cautious and only trade when you can afford the potential losses. When I am not occupied with the currency market, I will try to go over the fundamentals and update any significant changes to my technical studies for RIM.
