Some markets really moved this past trading week, however, there doesn’t seem to be much going on for trendfollowing on the higher timeframes. All trades underway (JPY, GBP, USD) have been going on for weeks now, but nothing new showed up on the trend horizon this last week. The NZD, EUR and Indices are still in a major correction on the weekly timeframe, while Gold and Silver have just entered one again. More updates on those developments will follow as soon as the markets have had more time to develop throughout the coming weeks.
Let’s therefore take a closer look at the USDCAD since it has reached an interesting price level.
After this market moved higher and higher from 2014 to early 2016, a divergence on the weekly chart was created. Prices usually won’t hold up for much longer after an already extensive move and start to decline after the Momentum indicator can’t hold up the pressure to have prices climbing more.
This is what we see in this market, a simple downtrend on the daily follows and takes the price level below the weekly balance zone. This is accompanied by the Momentum indicator going below 0, which indicates a major correction. Since a divergence appears on the daily while we’re in a weekly correction and prices approaching the next fractal (support) on this timeframe, it is likely we’ll see the USDCAD turn back up into the balance zone again to continue its overall corrective mode.
It is too soon to speculate which type – complex or simple – it will turn out to be. The trendfollower stays out of this market until new breakout levels have been created to put pending orders in.