USDCAD: Attempts A Correction But Vulnerable

The pair continues to trace out a temporary bottom but still retains its nearer term downtrend started from 1.0524 level. This leaves the risk of a return to the 0.9923 level traded on Feb 09'2012. A decisive break below there will call for a run at the 0.9890 level, its Oct 27'2011 high. Further down, support resides at its Sep 16'2011 low at 0.9779. The alternatively scenario will be for USDCAD to strengthen further on correction towards the 1.0051/74 levels. We expect a reversal of roles to occur here and turn the pair lower again but that level snaps, further bull pressure should build up towards the 1.0284/1.0317 levels . Further out, resistance comes in at the 1.0423 level, its Dec 14'2011 high followed by its Nov 25'2011 high at 1.0524. Further out, its Oct'2011 high at 1.0665 will come in as the next upside target. All in all, the pair remains vulnerable to the downside nearer term though attempting a correction.