Comprehensive USD/CAD Analysis For October 5, 2023

In this comprehensive analysis, Ultima Markets brings you an insightful breakdown of the USD/CAD for 5th October 2023. 

Key Takeaways

• U.S. Economic Data: The release of subpar U.S. economic data acted as a catalyst for market movements. This data sent shockwaves through the forex market, causing traders to react by selling off the U.S. dollar.
• Crude Oil Market: Another significant factor was the impending destruction of crude oil demand. This development, coupled with the gloomy macroeconomic outlook, played a substantial role in shaping the forex landscape. As crude oil prices began to fall, the depreciation of currencies in energy-exporting countries gained momentum.
• Canadian Dollar’s Depreciation: The Canadian dollar, in particular, saw a short-term depreciation trend that intensified due to the interplay of these factors.

USD/CAD Technical Analysis

USD/CAD Weekly Chart

The weekly chart of USD/CAD in October 2023 revealed a pivotal development. The closing line for the week was on the verge of breaking through the suppression of the downward trend line, which had been in place since October of the previous year. Furthermore, the stochastic oscillator was on the cusp of reaffirming the upward trend.

(Weekly chart of USD/CAD, source: Ultima Markets MT4) 

USD/CAD 4-Hour Chart Analysis

Zooming in on the 4-hour chart, we identified a weakening of prices following the recent breach of the weekly downward trend line. The stochastic oscillator displayed a divergent downward trend, indicating that the exchange rate was likely entering an adjustment cycle.

(4-hour chart of USD/CAD, source: Ultima Markets MT4) 

USD/CAD 1-Hour Chart Insights

On the 1-hour chart, the 23.6% retracement level at 1.36923 emerged as an extremely critical support price. This level could potentially mark the end of the downward trend. Conversely, falling below this level would signify a breach of the weekly downward trend line, casting doubts on the legitimacy of the recent upward trend.

(1-hour chart of USD/CAD, source: Ultima Markets MT4) 

USD/CAD Pivot Indicator

(1-hour chart of USD/CAD, source: Ultima Markets MT4) 

According to the pivot indicator in Ultima Markets MT4, the central price of the day was 1.37375. 

• Bullish above 1.37375, the first target is 1.37846, the second target is 1.38264 
• Bearish below 1.37375, first target 1.36966, second target 1.36495 

Conclusion

In conclusion, October 2023 brought about a series of significant fundamental and technical developments in the USD/CAD forex market. Traders were faced with key decision points, influenced by a variety of factors, from U.S. economic data to crude oil prices.

The forex market remains inherently volatile, emphasizing the importance of informed, strategic, and responsive trading decisions.

At Ultima Markets, we are committed to providing valuable market insights to empower your trading decisions.

While this article offers a comprehensive overview of the USD/CAD situation in October 2023, it’s essential to keep a watchful eye on market developments and continue refining your trading strategies to stay ahead in the competitive world of forex trading.

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Disclaimer

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Focus on USD/CAD today. 

Fundamentally, the continued rise in oil prices this week has driven market demand for the Canadian dollar and promoted the appreciation of the Canadian dollar. This has also made the implementation of the Bank of Canada’s monetary policy more difficult to a certain extent. In the short term, oil prices affect the appreciation trend of the Canadian dollar. However, as Canada’s real per capita GDP shrank year-on-year in the second quarter, the unemployment rate began to rise in May, and coupled with the continued drag on mortgage loan renewals, Canada’s price level may go downward. Therefore, if there are no unexpected changes in supply and demand in the crude oil market, it may be difficult to change the Bank of Canada’s stance of keeping interest rates unchanged at the October meeting.

Technically, the downward trend line on the weekly chart of USD/CAD effectively prevents the exchange rate from rising further. After encountering resistance last week, it has entered a downward trend this week. However, the stochastic oscillator has a clear short signal, and we need to wait for the final closing today. 

(Weekly chart of USD/CAD, source: Ultima Markets MT4) 

The market has started an upward trend since hitting the 200-week moving average in mid-August. Based on the complete five-wave structure of the entire upward trend, the current decline is temporarily judged to be an adjustment structure of the previous upward trend. After sufficient adjustment, the Canadian dollar may further depreciate. 

(Daily chart of USD/CAD, source: Ultima Markets MT4) 

On the daily chart, the rate has reached a very critical support position against the Canadian dollar. The market finally retreated after the stochastic oscillator signaled a double divergence. At present, it has fallen to near the 33-day moving average. The clear top structure means that the current support position is a strong resistance area, and bulls may usher in a “counterattack” in this area during the day. 

(1-hour chart of USD/CAD, source: Ultima Markets MT4) 

On the 1-hour chart, the oscillator also sent out a bottom divergence signal yesterday, and the market is likely to consolidate or rebound in the short term. If the market breaks through 1.35173 during the Asian session, traders can focus on rebound trading opportunities during the day. The first target is around the red 65 moving average. 

(1-hour chart of USD/CAD, source: Ultima Markets MT4) 

According to the pivot indicator in Ultima Markets MT4, the central price of the day was 1.35173. 

Bullish above 1.35173, the first target is 1.35422, the second target is 1.35789 

Bearish below 1.35173, first target 1.34816, second target 1.34570 

Disclaimer 

Comments, news, research, analysis, prices and other information contained in this article can only be regarded as general market information, provided only to help readers understand the market situation, and do not constitute investment advice. Ultima Markets will not be responsible for any loss or loss (including but not limited to any loss of profits) that may arise from the direct or indirect use or reliance on such information.