The Loonies about to blow ?

The Canadian together with the Australian Dollars are what regarded as commodity currencies. This is due to the fact both nations' economy which are unlike those of other developed nations, they are more biased toward their natural resources like coal, copper, iron ore, and gold. So the fortune of the minerals largely will affect that of the Canadian Dollars and Australian Dollars.

The Canadian Dollars or Loonies has been range bounding for the past 2 months which can be seen by the falling and lowly ADX which is currently at 13. But it has been getting increasing bullish as the positive MACD is fast approaching its own zero signal line while the Stochastic is also approaching its 50's signal line. Both of which are usually more bullish signals. At the time of writing this, I also note the ADX has begun to raise its head which may be foretelling us a trend is back.

But as usual I would not get excited over a market unless I see some kind of divergences therein. Here it is very clear while the Loonies fell to a new low on August 4th. compare to its last low on June 1st., the MACD has NOT follow suit by registering a lower trough but instead has formed a higher trough. This is actually telling us the shorties are getting less confident and clearing out of their positions.


The weekly chart's divergence is only found at the Stochastic which is about to cross up its 20's signal line which could be taken as an initial buy signal. Prices also have closed up above the lower Bollinger Band which is another minor buy signal. But the flat ADX which is holding above its 20's is not too encouraging. This is read as there is little trend.

I would like to see price closes above its recent fractal point of 1.110 as a confirmation of the return of the bull. In the case of the Canadian Dollars, Japanese Yen and Swiss Francs charts, when prices go upward it would mean these currencies are depreciating against the USD and vice versa. As mentioned in the first paragraph, the Loonies should be depreciating because most of the commodities have already begun to show signs of weaknesses which would affect the Canadian's economy in some way.

On the other hand, the coming depreciation of the Loonies is also reinforcing my bullish readings on the USD. So has the British Pound's.