(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend line in red; Fibonacci retracements in grey; 100-period simple moving average in light blue.)
3/14/2008 â€“ EUR/CAD â€“ A large rising wedge pattern has been forming on the EUR/CAD daily chart, as shown, since August 2007. This wedge is outlined on the chart by the converging green lines. The lower border of the wedge has been touched at least three or four times, while the upper border has been touched at least four times before it was hit once again on Friday (3/14/2008). The upper border of this wedge also currently coincides with a long-term downtrend line (represented on the chart by the red line). Combined, these two lines are providing relatively strong price resistance, as of this writing. Therefore, any breakout above this level with follow-through should represent a solid potential breakout trading opportunity. On the other hand, a bounce back down, which is supported by overbought oscillators like the displayed Stochastics, should target support at the 38.2% Fibonacci retracement level (the low-to-high retracement span being measured from the last touch of the wedgeâ€™s lower border on 2/26/2008 to Fridayâ€™s touch of the wedgeâ€™s upper border), and then ultimately the support found at the bottom line of the wedge. Ultimately, a breakdown of the bottom line of the wedge should represent a very good potential breakout trading opportunity, as it would mean that the wedge will have fulfilled its common role as a trend continuation pattern.
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.