CDN dollar – how low could it go?

 

The Canadian dollar cracked Key support in the 0.93 area recently. The long term chart shows that the next major area of support (solid red line) lies around 0.85/USD. Yikes!

CDN$

Near-term, there are some indications that the loonie is a bit oversold. Stochastics and RSI are getting down there on the daily chart. They haven’t hooked up yet, so no sign of a bounce just yet. Bollinger bands “pinched” when the dollar broken that 0.93 major support zone in December. Since then, the loonie has fallen like a rock, riding the lower Bollinger band, and even breaking it a few times. When this happens, the longer view is bearish. Note on the daily chart how other times this happened (Bollinger pinch and momentum oversold), the loonie staged temporary rallies. But those rallies didn’t last too long.

CDN$ short

More evidence for a bearish loonie

The USD, vs. a basket of world currencies, bounced off of support back in November. It targets 83-84 (red dashed line) on the US dollar index, shown below.  This puts more pressure on the loonie, long term.

My thoughts are that any near termed rally on the loonie might be a good time to buy more U.S. dollars. Feel free to post your thoughts on the outlook for the loonie in the comments section below.

usd

2 Comments

  • Hi Keith,
    Last show on BNN that I am aware was on Dec 18/2013 when you were on.
    I got feeling from last post that you were on BNN for shorter time ( a comment). Did I miss your show on BNN?? If yes, I would appreciate if you can post the link. TIA

    Reply
    • No–I was on for the usual 1- hour MarketCall Tonight show. I typically do one show every 5 weeks–that’s how they rotate all of the regulars. Sometimes they also call me up for a 7-10 minute comment on something that happens to be in the news. But I’m less available for the short spots than most of the guests, given that most of them are in Toronto and can easily pop into the studio–I’m in Barrie, which forces BNN to look for an open camera at the local Barrie CTV office–not always easily done.
      I’m on MarketCall next Tuesday January 28th at 6pm. A little personal info–got a new burgundy suit custom made recently–looking forward to showing it off on Tuesday! Hey, its the little things in life that make it fun, eh?

      Reply

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