FXstreet.com (Barcelona) - In $/cad, the view over the last few months remains in place as the market continues to form a large pennant/triangle since last Oct. Though these are seen as continuation patterns suggesting an eventual upside resolution, they break down into 5 legs and argues a final test of the base first (currently at 1.2025, see daily chart below). Note too that yesterday, the market spiked slightly above the ceiling (currently at 1.2975/1.3015), before reversing sharply back below (a bearish false break, common for 1 leg of these patterns to over/undershoot its trendline). Also the short term fall from that high occurred in 5 waves (suggests downside not complete, see short term chart at www.fxa.com/solin/comments.htm ), with both adding weight to the view that an important top may be in place. Took profits on the early Feb buy 1.2435 on today's break below the week long bullish trendline at 1.2875 (for a 440 tick profit, said to use an intraday break due to rising risk on approach of the ceiling of the large wedge). For now, want to be short and would sell here (currently at 1.2835). However, with some risk for more topping, would initially use a wide stop on a close above the 1.3060 spike high. Resistance before there is seen at 1.2885/95 (50% retracement from 1.3060), and the 1.2975/1.3015 ceiling of the pennant.

Longer term, the bullish bias that has been in place since last Aug near 1.0300 (broke above the multi-month pennant and warned that they resolve sharply higher) remains in place. As mentioned above, the consolidation/triangle since last Oct is seen as a continuation pattern/correction (wave 4 in the rally from the Nov 2007 low at .9060), and suggests an eventual upside resolution (though there is some risk for a final test of the base first, see ideal scenario in red on weekly chart/2nd chart below). So for now, would maintain the long held, longer term bullish but will start to look for signs of a more important top on the upside resolution of the 5 month correction (potential triangle/ pennant). Longer term resistance above 1.3015 is seen at 1.3450/00 (62% retracement from the Jan 2002 high at 1.6185), while key support is seen at the base of the multi-month triangle (currently at 1.2025).