(Updated 06/30/2018; Click Read More to view the original article)
If you want to find the USD to CAD exchange rate, you can use xe.com to chart its historcal data as shown below:[1]
However, if you want to apply technical analysis on the chart, you may want to go to stockcharts.com to do the job as shown here:
In the above chart, we have used symbol $ONE:FXC as a proxy of USD-to-CAD Currency Exchange Rate. There are four indicators (from the top panel to the bottom one) used in our analysis
Developed by J. Welles Wilder, RSI is a momentum oscillator which oscillates between zero and 100. Below is a rough guideline on how to interpret if the stock is:
The MACD turns two trend-following indicators, moving averages, into a momentum oscillator by subtracting the longer moving average from the shorter moving average. As a result, the MACD offers the best of both worlds: trend following and momentum.
Traders can look for the following occurrences to generate signals:
When Black rallies above both Red and Green, it identifies an overheated market (significantly overbought/extended trend). When Black turns down while above both Red and Green, is shows the major trend has stumbled.
As Marc said, the technical tone is still constructive, and the five-day moving average has remained above the 20-day average. However, he expected that the dollar's technical correction may have more room to run.and, therefore, more backing and filling for the greenback may start July.
- The greenback had a strong quarter ending on 06/30/2018, appreciating against all the major currencies. The Canadian dollar's 2.25% decline made it the strongest of the other majors and is consistent with the loonie's tendency to outperform in a strong US dollar environment.
If you want to find the USD to CAD exchange rate, you can use xe.com to chart its historcal data as shown below:[1]
However, if you want to apply technical analysis on the chart, you may want to go to stockcharts.com to do the job as shown here:
In the above chart, we have used symbol $ONE:FXC as a proxy of USD-to-CAD Currency Exchange Rate. There are four indicators (from the top panel to the bottom one) used in our analysis
- RSI (Relative Strength Index)
- An extremely popular momentum indicator
- Bollinger Bands
- MACD (Moving Average Convergence/Divergence Oscillator)
- One of the simplest and most effective momentum indicators
- ADX Line (w/ +DI and -DI)
RSI
Developed by J. Welles Wilder, RSI is a momentum oscillator which oscillates between zero and 100. Below is a rough guideline on how to interpret if the stock is:
- Overbought
- RSI > 70
- Oversold
- RSI < 30
- Uptrend (or In a bull market)
- 40 ≤ RSI ≤ 90 with the 40-50 zones acting as support
- Downtrend (or in a bear market)
- 10 ≤ RSI ≤ 60 with the the 50-60 zone acting as resistance
Bollinger Bands
Bollinger Bands reflect direction with the 20-period SMA and volatility with the upper/lower bands. The rough guidelines for interpreting it include:
- When the weekly mid Bollinger band turns down, it implies the intermediate term trend turns down.
- When the bottom/upper band is starting to move lower/higher, it suggests price action could be starting to head that way.
- When the price moves outside the bands, it is significant
- According to Bollinger who developed it, the bands should contain 88-89% of price action
- Technically, prices are relatively high when above the upper band and relatively low when below the lower band.
- However, relatively high should not be regarded as bearish or as a sell signal. Likewise, relatively low should not be considered bullish or as a buy signal.
- When the price bumping into the upper band lines, it doesn't inherently mean the price has to pull back.
- The upper Bollinger bands could end up simply guiding the index higher indefinitely.
MACD
Traders can look for the following occurrences to generate signals:
- Signal line crossovers
- Bullish crossover
- When the MACD turns up and crosses above the signal line (red line in the chart)
- Bearish crossover
- When the MACD turns down and crosses below the signal line
- Centerline crossovers
- Bullish centerline crossover
- When the MACD Line moves above the zero line to turn positive
- Bearish centerline crossover
- When the MACD moves below the zero line to turn negative
- Divergences
- Bullish divergence
- When a stock price records a lower low and the MACD forms a higher low
- Bearish divergence
- When a security records a higher high and the MACD Line forms a lower high
ADX (Average Directional Index)
There are two versions provided on stockcharts.com. Here we have chosen the version which shows both the direction and strength of the trend:
- ADX Line (w/ +DI and -DI)
- Black line
- ADX measures the strength of the trend and does not have a directional bias.
- A strong trend is present when Black ADX is above 25 and no trend is present when below 20.
- Green line
- Plus Directional Movement
- Red line
- Minus Directional Movement
The single best signal with ADX comes after Black falls below both Red and Green. When Black rallies from below both Red and Green it shows the market is waking up from a lull.
Summary
From the chart shown on 06/30/2018, it may imply that:
- The intermediate-term trend is still up. But, short-term correction is happening now.
The greenback had a strong quarter, appreciating against all the major currencies. The Canadian dollar's 2.25% decline made it the strongest of the other majors and is consistent with the loonie's tendency to outperform in a strong US dollar environment.Finally, Marc's seems to like using 5/20-day MAs in his technical analysis. Here is a chart with 5/20-day MAs.
As Marc said, the technical tone is still constructive, and the five-day moving average has remained above the 20-day average. However, he expected that the dollar's technical correction may have more room to run.and, therefore, more backing and filling for the greenback may start July.
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