USDCAD’s Failed Breakout Attempt Hinges on Next Crude Oil Price Move

Talking Points:

- Crude Oil prices appear to be holding a key trend level as fresh supply concerns arise around Venezuela.

- After softer Canada GDP figures for February, Crude Oil strength may be a prerequisite to see any significant Canadian Dollar strength.

- Recent changes in trader positioning suggest that Crude Oil may still have further gains ahead.

Crude Oil prices have spent the past few weeks lingering around an important technical area, running into the trendline from the February 2016 and May 2017 swing lows – an area, once broken in November 2018, that signaled the ‘flush’ in markets.

Crude Oil Technical Analysis: Daily Price Chart (February 2016 to April 2019) (Chart 1)

Accordingly, a break in oil prices around 64 could be a trend defining area for the coming months: failure to continue the rally here would suggest that oversupply concerns may be becoming more prominent on traders’ minds now that the June OPEC cut expiry is around the corner; or success rallying here would indicate that near-term concerns about tightening supply due to sanctions on Iran or a military coup in Venezuela are driving sentiment.

Crude Oil Technical Analysis: Daily Price Chart (April 2018 to April 2019) (Chart 2)

In the very near-term, even as oil price battles with their former trendline support (now resistance), it’s still holds that the predominant trend direction remains pointed to the topside. Price has been well-supported by both its daily 8- and 21-EMAs, having closed above the former every session since March 11 and the latter every session since February 12. To this end, Slow Stochastics have been in bullish territory since January 12. Until these conditions change, there’s little reason to think that price won’t keep riding momentum higher. A close below the daily 8-EMA would give reason to shift the bias from bullish to neutral; only below the daily 21-EMA would a bearish bias become appropriate.

: Crude Oil Price Forecast (April 30, 2019) (Chart 3)

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