The Canadian dollar or "loonie" is performing nicely against the U.S. dollar with an advance of 0.16% this afternoon. Stronger-than-expected Canadian wholesale inflation of 0.9% -- beating the previous read of 0.5% -- combined with stronger crude oil prices is fueling an interesting technical situation.
Looking at the chart lines, traders see the current Fibonacci upward wave from $0.9719 to the high at $1.0656 with a deep pull back to the 78.6% following the Fibonacci rules of a price target at the -18% or $1.0821.
Price movement has been making higher lows but at the same time has been making lower highs, suggesting consolidation ahead.
The T3 Tilson crossed above the 150-day moving average on August 11 (bullish for the U.S. dollar) and continues to trade above that level.
However, the relative strength indicator (RSI) rolled over inside the overbought territory today.
With the USD/CAD briefly piercing most inner trend lines, we are seeing support around $1.0345 before settling in around the 20-day moving average at $1.0263.
Taken together, these factors are painting a picture of a short-lived loonie rally.
Trader looking for an alternative to the forex market can gain exposure to the Canadian dollar through the Currency shares Canadian Dollar Trust ( FXC , quote ).
This ETF seeks to track the price of the Canadian dollar net of trust expenses.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.