Readers of my blog and of my book WSW
know the importance of the planet Mars for financial and commodity
market cycles. Presently I believe a major cycle of Mars has been
completed by the USD/CAD offering interesting medium to long term
opportunities.
1-The last Major top in USD/CAD
was on March 9, 2009 (3 days after the S&P bottom at 666): if you
count 780 days (or one full cycle of Mars) from that date you get to
April 28, 2011 right on the day when the USD/CAD traded as low as 0.9450
which is the lowest level touched by the pair in the last 26 months (I
believe this is going to be an important cyclical low).
2-The top on March 2009 was 1.30 the low a couple of weeks ago was 0.94
That
is 3600 pips in 780 days: you can call it a full circle of 360 degrees
completed in the same time frame Mars needs to completed its
synodic cycle.
3-The USD /CAD seems to be really sensitive to the 777/780 days cycle as you can see in the weekly chart attached below:
Weekly USD/CAD chart
4-Retailers have been buying the USD
versus the CAD all the way down from 1.30 and they have recently shifted
to net short the USD and long the Loonie....this is a strong trend
reversal indicator: I post below a chart recently found on dailyfx.com
courtesy of analyst David Rodriguez:
Retailers are good contrarian indicators in this pair
5-Technically the USD/CAD has
showed strength over the last couple of weeks
challenging and surpassing respectively its 10-20-50 days moving
averages which are turning higher and this first leg higher is now being
contained by the 100 days moving average at 97.7 with the pair
currently trading at 0.971 It looks like the USD/CAD
is tentatively forming a series of 1-2 waves in a new long
term up trend. This pattern could offer conservative
buying opportunities around 0.9660 or lower around
0.9550 if the current pullback extend completing the series of
1-2 waves without further acceleration....or
for aggressive traders breakout opportunities could
be chased above the 100 moving average (this pair has the tendency to
accelerate all of the sudden leaving most of the traders out guessing
what's going on). Regardless of your style of trading, I think it is
worth keeping an eye on this pair for the next few weeks....this could
be the beginning of a new important trend and this is a pair that
is negatively correlated with commodities and stocks so it is a
great hedging instruments as well for those still
with risky assets exposure. The risk is well defined as well here, the
end of April low at 0.945 is a line in the sand.
Series of 1-2 developing before an acceleration higher?
5-This opportunity is an alternative way to play our long term bearish outlook on stocks according to our 2011 stock market forecast and it recent update...and that's another good reason for me to like this idea....after all I have said and posted many times that currencies were supposed to anticipate stocks and lately they are leading the way as far as the return of the bear is concerned.
I think I will keep this blog updated with this pair for the near future and your comments and feedback will be welcomed as usual.
