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Crude Oil, CAD Technicals Point To Commodity Recovery

Published 10/09/2015, 02:59 PM
Updated 07/09/2023, 06:31 AM

As we might expect, the big decline in oil prices triggered a mirror-image reverse trend in USD/CAD as the Canadian dollar weakened at every down-step in the price of oil since July 2014.

Two Features Stand Out

1) IF, and only IF, crude has turned up for an intermediate-term recovery period, then the relationship with CAD should invert (already has) for the next several months (i.e- during the fall and winter months).

2) My technical work in USD/CAD (lower chart) shows what I think is a breakdown in the pair -- upside breakout in CAD -- from a rising-wedge formation, which the vast majority of the time is a trend-ending pattern.

Both the improving technical set-up in crude oil and the breakdown from the rising-wedge formation argue strongly that CAD is heading higher -- the USD/CAD is heading lower, with a next target zone of 1.2600-1.2550.

Crude Oil (T), USD/CAD

Latest comments

Crude won't recover. US production and inventory are too high, Saudis fighting market share is a long term goal. If crude stay below $50 for 2 more quarters, defaults and bankruptcy will happen. Goldman prediction $20 oil may be reachable.
Thanks for the update Mike. The picture is definitely not looking too good for commodities especially in the case of crude. Considering economic uncertainties rising around the world, it seems commodities will continue in their decline. Both the supply side and the demand side for crude has been fairly negative towards its price.
commodities will not recover because the demand is low !. with rate without rate no one can make magic !. when most of the money is in the hands of 1% of the population the demand will shrink more and more . all system will collapse . Dollar Euro and Yen will die, only on this way USA EUROP and JAPAN can pay their debt..... some countries will ask Gold for commodities . this is very close to happen . the FED and all central banks kills their money . you can not print 3T USA 2T Europe and 1T Japan and expecting that it will keep its value . the absurd is that who is still holding the value of these coloured peppers is countries that buying it . China , Araba Saudia ,Brazil, Russia . these countries should sell all their dollar and buy Gold . Western economy is in huge debt and they are living like kings on the bag of rest of the world . my prediction is total collapse of all economic system in 4-5 years . I am prepare for that I bought farms to sell the only thing that we really need it called food.
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