Trading a Commodity Currency USD/CAD on a Four-Hour Chart
10/21/2008 4:41 pm EST
(Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend line in red; horizontal support/resistance levels in yellow; 50-period simple moving average in light blue.)
As of mid-Tuesday (New York session), price on the USD/CAD four-hour chart, as shown, has just tentatively surpassed a major top that represents the three-year high in the pair. Price broke through the key 1.2000 level and reached up past the previous high around the 1.2120 level on Tuesday morning, breaking through the strong resistance there.
Any major retreat from this new high should meet strong support at the level of the steep uptrend line (in green) that has been in place and well-respected since late September. In the event of a close significantly above the 1.2120 top, on the other hand, price will have confirmed an exceptionally forceful upward momentum, and should then target further upside resistance in the immediate 1.2250 region, a significant prior support/resistance level.
By James Chen, Chief Technical Analyst, FX Solutions