(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; downtrend lines in red; 50-period simple moving average in light blue.)
3/04/2008 â€“ USD/CAD â€“ Taking a good look at longer-term price action on weekly and monthly charts can often illuminate trends and directional biases more readily than on shorter term charts. This can certainly be said about the key USD/CAD pair. As shown on the displayed USD/CAD weekly chart, price has been well-entrenched in a very significant downtrend for many years. The current long-term downtrend has been firmly in place since the beginning of 2002. In addition, the lows reached within the last year have represented some record historical lows for the pair, which culminated in the extreme low approaching 0.9050 on 11/7/2007. Prior to this extreme low being reached, price accelerated its existing downtrend into an even steeper line (represented on the chart by the shorter red line), which is currently still valid. As of this writing, price is very close to the resistance imposed by this line. With the recent bounce down off the line a couple of weeks ago, technical signs are currently pointing towards a continuation of the downtrend. Besides the fact that relatively strong resistance resides closely to the upside, long-term oscillator action on Stochastics is displaying a continuing longer-term down-momentum. If this continuation down indeed occurs, barring any fundamentally-driven breakouts above the current downtrend line, the next major support to the downside resides around the 0.9750 region, and then ultimately at the historical low of around 0.9050.
Chief Technical Analyst
IMPORTANT NOTICE: These comments are for information purposes only. The information contained on this document does not constitute a solicitation to buy or sell by FX Solutions, LLC., and/or its affiliates, and is not to be available to individuals in a jurisdiction where such availability would be contrary to local regulation or law. Opinions, market data, and recommendations are subject to change at any time. Forex trading involves substantial risk of loss and is not suitable for all investors.