Canada posts 70,000 job losses (mostly related to election being over from previous month) and our dollar drops. The US posts almost 10x as many job losses for Nov and their dollar goes up?! It is almost as if the more bad news that comes from US the stronger their dollar will be. Do you people realize that lowering the value of the CDN dollar like this is costing me more money! I have to pay more for groceries as we buy from US in winter, and all consumer goods that are sold here are bought in USD! This has gone on long enough, the fair value of the CDN is 85 cents USD.

Total number of jobs lost between the two countries is not a good comparison as the US labor force is far greater than that of Canada. At the same time, that was a massive drop in US payrolls and it makes little fundamental sense for the dollar to be so strong across the board after such a number.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

I'm surprised no one has mentioned this massive triple top in USDCAD. It's such a prominent technical level at a major round figure. At the same time, the dominant trend is still heading north. A very dangerous proposition for both those looking for breakouts and ranges considering we are just about to hit the weekend liquidity drain.

What to do? I'm probably going to make this the range trade for the day, but it will have to come with plenty of risk disclaimers and perhaps a wait-and-trade approach for the entry.

Anyone taking a position on this?

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

I scaled in a couple of small shorts John...like you said, the triple top is very nice and we have some room for a decent bounce and retrace back down (as it's done on the last two run-ups to this figure).

It's been a nice uptrend over the last week though!

If I understand triple-tops, you will need to see a retreat before you can be sure it is such a thing. My earlier statements on the weakness of the $CDN dollar may hold awhile longer: political uncertainty (the parliament shut-down reduced near-term uncertainty but it also suggests no CDN bailouts until at least February), very poor commodities strength across the board, and the tip of the Canadian real-estate iceberg being seen (banks could take further losses on foreclosures), it would seem fundamentals point to more scares for $CDN.

Back to the triple-top, what does it mean that there is increased smoothing of the curve (i.e. integration) amongst the peak? ... that each peak is preceded by a progressively smoother and shallower dip?

Bulkowski: "Each top should be part of its own minor high, a distinct peak that towers about the surrounding price landscape."

If that's true, the latter peaks are less convincing and may simply be "congestion"(?). I take the 10-year view here to see where the $CDN could possibly go. The market trauma is increasingly forcing the viewing window open further and further in the search for precedent.

Wondering if i am in the correct mind frame when technical traders see divergeance, Is the time frame correct with MACD & RSI to show good data for divergeance ?

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Wondering if i am in the correct mind frame when technical traders see divergeance, Is the time frame correct with MACD & RSI to show good data for divergeance ?

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Look at my charts , and tell me if i am correct on divergence ? Thanks

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It would appear so; but I don't personally put a lot of stock into divergences in oscillators. These indicators are based on prices, so it is often repetitious and confirms itself. You should include a momentum indicator to get a different bias.

Altogether though, it is highly dangerous to fight against the strong short-term and long-term momentum behind this pair. A breakout is highly probably; so we should be exceedingly cautious in looking for a reversal. Waiting until after the weekend, lower position size, widening stops and looking for confirmation is good policy in a situation like this.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

This is text book triple top. The higher swing lows is just a necessary component to keep pushing the pair back up to 1.30.

If the swing lows were even or descending, this would be a completely different setup.

If the lows were all reversing at the same point, it would be a broad channel that contained heavy volatility - and would probably be a better setup for range trading.

If lows were pushing progressively deeper, the fact that it was rebounding so sharply would hint at a very strong bullish basis that was able to consistently fight off drawdowns - and would be more prone to upside breakouts.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

Thanks for the insight John; your analysis seems confirmed today by 1.30 to 1.27 short-term pullback.. I'm still wondering what the rate cut next week will do to USDCAD... will it break through 1.30 or does the reversal here suggest a strong break downward regardless?

But the pullbacks from the top have been progressively higher.

Oil's lows have been progressively deeper and its retracement highs have been progressively lower

The charts on my screen for CAD and oil have a regression line that falls from the upper left of the screen to the bottom right. Until that reverses, I think they'll continue going down until they go up So i'm still bearish CAD and oil for the short term.

What momentum indicator do you suggest !
Thanks !!

Preference depends on your style of trading. Personally, I think moving averages, average true range and the momentum indicator work the best. Try them out and see if they help your trading.

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John Kicklighter is the author of Dynamic Carry Trade Basket, Watch What The Fed Watches, and Forex Trading Weekly Forecast on DailyFX.com

Looks like a break out UP to me. The lows are higher and oil isnt going up any time soon. April Futures are trading in the low 40,s. Most people think the markets have bottomed but don't realize its just the start Of a down turn that will take over another year to bottom at least! Theres companies that have been in business for 100 years closeing shop in Dec. The news for most isnt realized for another month or the next quarter. Once the people with some money have secured there very long term investments in good solid companies 5 bucks and less the market will stall. With no fresh buyers just more panic sellers at any price as more large companies fail. Canada has always followed the oil prices. As long as oil is low the Loonie will be week. As long as oil is low the dollar will be stronger agains the Loonie. Canada is a natural resorce country and as long as oil ,gas ,and gold are at 1990,s levels the loonie will be at 1990,s levels. The tripple top will break one day. Unless the DOW goes above 11000 the loonie will not be close to par. Oil follows the markets if the markets are going down oil goes down and up when the markets are up. You can accualy scalp the loonie with a live oil chart and not the usd/cad Ive done it just to see! I never trade with out a oil chart and the indice of the day up. They move together. Im probably the minority but the dow I see is heading for 4500, 6500 for sure!! I called this last year and called the 7500 but every one thought I was nuts then so what ever. Last spring I said Canada and The USA was in a ressestion but I was slammed for that also!! Oh ya and my grammer and spelling. Take what you want and leave the rest. This {coallition}sp GOVT stuff going on in Can right now sure doesnt send a very stable message to other Counties about our ability to recover? You could call it a Coo! I hope things improve within the next year or so because weve had it so good for so long it would be a shame to start over. The general bias would be in my opinion down for the loonie as long as oil is below 50 a barrel and the dow below 10500. The tSX follows the dow also. Lots of our stocks are also in US markets. I think higher retest of the dow will meet failure for quite some time and find new lows also. Just my two cents.