USD/CAD at Critical Level
01/08/2009 11:09 am EST
(Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; horizontal support/resistance lines in yellow; Fibonacci retracements in grey; chart pattern in magenta; 50-period simple moving average in light blue.)
Price action on the USD/CAD daily chart, as shown, has broken down below a key uptrend support line, after having first broken down below a small triangle continuation pattern. Subsequent to these breakdowns, price pulled back up to the point where it broke the uptrend line, but then stalled and retreated soon thereafter.
Currently, price appears poised to continue in the direction of the break. If this is indeed the case, a major support target to the downside resides around the 1.1450 region, a significant prior support/resistance level. A break and close back up above the uptrend line, on the other hand, should invalidate the current bearishness, and could therefore target the key 1.2100 resistance level to the upside.
By James Chen, Chief Technical Analyst, FX Solutions