Think crude oil inventory numbers aren’t important?

It’s an often overlooked economic release but if you are a USD/CAD trader or trade anything against the loonie, it’s a release that can sometimes create significant volatility. Today’s release was one of those occasions. The number came in at a 2.3 million barrel build up as opposed to the 2.3 million barrel drawdown that was expected. This economic release doesn’t typically trigger fireworks but it should be watched for the times that it does.

The USD/CAD has been trickling lower on the daily time frame with prices trading below the 34EMA Wave. The “four to six o’clock” angle of the market indicates a bearish Directional Bias. This means that a trend following entry will a short sell and that counter-trend entries should be limited to the five, 15, and 30-minute time frames.

Despite the bearish “sentiment + momentum = downtrend” environment, today’s MUCH better than expected crude oil inventory number is bearish to the loonie. Add to this the stock market drop thus far today and the rally in the greenback off 73.58 (making for what could be a “tweezer’s bottom” low on the daily chart with yesterday’s 73.60 low).

The daily USD/CAD tested 73.60 and 73.58 and set up a short-term bottom as the bears have tipped their hand as to where they are willing to support the pair.

PowerStats Price Range Forecast provided by Autochartist

The rally higher today has triggered a swing short on the 240-minute chart as the pair has reached the resistance of the 34EMA Wave. Further movement higher could be triggered by more greenback strength and crude oil weakness.  A stronger U.S. Dollar does often lead to commodities weakness, and is reflective of bearishness in equities – which also is leads to crude oil weakness – so this is many ways creates a perfect storm for weaker crude along with the resistance at 100.00.

 

The overall trend in the USD/CAD is still down despite today’s rally but trends don’t last forever. Is today’s rally in the greenback and resistance at $100/barrel crude oil a sign of a USD/CAD reversal. Not yet.

Watch the 0.9500 major psychological level overhead. Prices have already reached 0.9492 on the surge higher in today’s trading.

By the way, I am using some MT4 charts (IBFX version) in this update. It has my 34EMA Wave and GRaB candle plug-in that you can download here from RagheeHorner.com or a self-installing version for the IBFX4 verison of MT4. If you have any questions about these or my eSignal charts, just leave it here at the blog!


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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