I rarely trade the canadian dollar, as it can be crazy volatile and go too much in one direction sometimes, but the current chart setup offers a good opportunity with very little risk. As you can see on the chart below, 2950 is a strong support, holding now for over 2 years. Current price is now around 3060, so even a SL below 3000 might be used, if early in the week, the volatility is not too big. Target would be 3500, up to 3600 maybe, so the risk to return ratio is fantastic on this one, very little to lose for a lot to gain. And with Joe in office, oil will be most likely dumped, which only helps to decrease the CAD value.
My last week’s bull target was hit to the pip and I am slowly turning bearish on the pound. If you read my previous pound comments, I was basically bullish since the break of 1.28 and later even 1.27. My target was always 1.3170, which was hit twice now, for a nice double top. I can still see more of an upmove, but it should be limited and every spike above 3200 is a good selling opportunity. Even above 3300, no problem. Soon, we may have a trade deal with the EU, so GU would probably spike up on that, but that should be it, when it comes to the bullishness. Like I mentioned in one of my previous analyses, I expect retail to start buying pound heavily, when a trade deal is agreed upon, and that will be probably the best time to sell against the herd. But nothing wrong with selling now, even 3150 is a very good selling point for 200 pips or more. My medium term target is 2750, though, so for that, a SL above 3350 might be a good choice.
We had the US election this week and no matter how Trump may try in the courts, it looks like the election is lost for him. Of course, the election wasn’t clean, no election is and since the US has a 3rd world election system, with manual vote counting like in the medieval times, its easy to manipulate the election in any direction. This time, Democrats did the better job, so they won. Well, maybe one election in history was clean, the one in 2016, because from the leaked documents, it was obvious Clinton wanted Trump to be her opponent, even leftist media was pushing for him, since they expected an easy win for the Democrats that way. So the Republicans probably thought there is no point to manipulate the election and spend tons of money on it, since its lost anyway, as nobody took Trump seriously…and Democrats probably thought the same, why spend resources, if there is no chance in hell they could lose that election. So they just left it to the people, maybe for the first time in history, and it turned out to be the funniest election night ever. They surely learned their lesson and were prepared this time. Not that it matters to us, who is in the White House, since politicians don’t care about the people, anyway, so lets try to make the best out of it and make some money, at least.
When it was more and more clear to the market that Biden will win, dollar was dropping heavily…and now everyone seems to think that if Biden gets elected officially, dollar will drop, which I don’t see happening. Lets look at the history of the past presidents and the correlation with USDx and EURUSD. I think the charts below say more than any amount of words would, so enjoy.
I will start with USDCHF this week, because this friday I saw something I have seen before, one year ago, to be exact, also on a friday. Back then UCHF made a surprising spike above parity, it hit something around 1.0020 and looked super bullish. I remember it, because one “guru” on forexfactory, with some of the most followers, admired by many(not me), predicted a super strong UCHF in the following months, targetting 400-500 more pips up. But it was more than clear that it was a topping pattern, more than anything else. The same friday, the pair went back towards 1.0000 and closed there, still seemed strong. On the coming monday, it dropped over 100 pips and the drop didn’t stop…now its over 1000 pips, since it was dropping all year. Just tells you how you should always do your own analysis and never blindly follow anyone, nor me for that matter. But back to UCHF…this friday, I saw a very similar price action to the one from one year ago…now we dropped below 9000, pair seemed dead as there was no power to bring it up 5 pips…eventually corrected itself and broke back above 9000. A very similar thing…9000 is a very strong and important number…just like parity was…and a strong franc is killing the swiss economy at the moment, which worries even the SNB, since they are trying to interfere in the markets for months now. Eventually they may succeed. I definitely don’t want to be the one trading against a central bank. Now, I am not saying UCHF will go up 1000 pips…BUT it definitely should go up some…and most probably higher than it was in the past few weeks or months. My first big target is at 9200 and if broken to the upside, I think we have a new trend, uptrend that is.