Oil Rebound and USDCAD Downside Risks

Intermediate

Despite the oil setback in early 2017, a rebound effort last week leaves a positive tone within a now intermediate-term range environment. However, the underlying theme remains for higher oil prices.

Furthermore, the rebound in the oil price has allowed for a strengthening of the Canadian Dollar, which alongside the recent negative correction for the US Dollar has encouraged USDCAD losses. The USDCAD move below important support at 1.3077 neutralised the bullish intermediate-term outlook, with risk of a shift to a bearish intermediate-term view on a break below 1.2996.

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Brent Crude Future (ICE, March 2017 contract)

A cautious Friday after the Wednesday-Thursday rebound up into the resistance area at 56.30/50, leaving the bias to the upside for Monday.

However, the previous prod below 53.60, shifted the intermediate-term outlook from bullish to neutral.

For Today:

  • We see an upside bias for 56.43/50 may be up to; break here aims for 57.47.
  • But below 55.01 opens risk down to 53.58.

Short/ Intermediate-term Range Parameters: We see the range defined by 47.70 and 58.53.

Range Breakout Challenge

  • Upside: Above 58.53 aims higher for 60.00 and 69.63.
  • Downside: Below 47.70 sees risk lower for 45.51 and 43.95.

 

Daily Brent Crude Future Chart (ICE, March 2017 contract)

USDCAD

Despite a rebound at the end of last week, resistance at 1.3210 has capped, leaving a bearish bias for Monday from the Wednesday plunge down through the uptrend line support from May 2016 and below 1.3077.

Furthermore, the break below 1.3077 neutralised the intermediate-term bull trend, switching to an intermediate-term neutral tone, whilst growing risk is for an intermediate-term shift to bearish, triggered through 1.2996.

For Today:

  • We see a downside bias for 1.3028; break here aims for key support in the 1.3002/1.2996 area.
  • But above 1.3210 opens risk up to 1.3294.

Short/ Intermediate-term Outlook – Upside Risks:

  • Whilst above 1.3077, we see a positive tone with the bullish threat to 1.3598.
  • Above here targets 1.3837/59 and 1.4000/17.

What Changes This? Below 1.3077 signals a neutral tone, only shifting negative below 1.2996

Editor in chief

Steve Miley has 29 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Market Chartist, the Editor-in...continued

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