Will USD/CAD, WTI Fall as Long Bets Rise?


Canadian Dollar, USD/CAD, Crude Oil, Technical Analysis, Retail Trader Positioning – Talking Points

  • IGCS warns that USD/CAD and crude oil prices may turn lower
  • Technical signals, however, warn that USD/CAD could bounce
  • WTI may be stalling under February 2020 highs, watch support
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In this week’s webinar on IG Client Sentiment (IGCS), I covered the outlook for the Canadian Dollar and crude oil. IGCS is usually a contrarian indicator. For a more in-depth analysis of where these assets may go, along with overviews of the Dow Jones and Australian Dollar, check out the recording of the session above.

USD/CAD Sentiment Outlook – Bearish

The IGCS gauge implies that roughly 61% of retail investors are net long USD/CAD. Upside exposure has increased by 10.71% and 5.01% over a daily and weekly basis respectively. The combination of current sentiment and recent changes offers a stronger bearish contrarian trading bias

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Canadian Dollar, Crude Oil Forecast: Will USD/CAD, WTI Fall as Long Bets Rise?

Canadian Dollar Technical Analysis

From a technical standpoint, USD/CAD may be at risk to a turn higher in the near-term following the presence of positive RSI divergence. This is a sign of fading downside momentum. Keep a close eye on the 50-day Simple Moving Average (SMA) and what may be a potential falling trendline from March’s top. Downtrend resumption entails a drop through the 1.2590 – 1.2630 support zone.

USD/CAD Daily Chart

Canadian Dollar, Crude Oil Forecast: Will USD/CAD, WTI Fall as Long Bets Rise?

USD/CAD Chart Created in Trading View

Crude Oil Sentiment Outlook – Bearish

The IGCS gauge implies that about 51% of retail traders are net long crude oil. Downside exposure has decreased by 2.78% and 12.84% over a daily and weekly basis respectively. The combination of current sentiment and recent changes offers a stronger bearish contrarian trading bias.

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Canadian Dollar, Crude Oil Forecast: Will USD/CAD, WTI Fall as Long Bets Rise?

Crude Oil Technical Analysis

WTI crude oil continues to hover under the February 2020 high. A rising trendline from early November is maintaining the focus to the upside. A break under support would expose the 50-day SMA which may reinstate the focus to the upside. Otherwise, subsequently taking out this point exposes former peaks from August. A climb above 54.45 on the other hand opens the door to revisiting the January 20th, 2020 high.

WTI Daily Chart

Canadian Dollar, Crude Oil Forecast: Will USD/CAD, WTI Fall as Long Bets Rise?

Crude Oil Chart Created in Trading View

*IG Client Sentiment Charts and Positioning Data Used from January 26th Report

— Written by Daniel Dubrovsky, Currency Analyst for Finance Prop.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter





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By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

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