(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; horizontal support/resistance levels in yellow; uptrend lines in green; downtrend lines in red; 50-period simple moving average in light blue.)
5/12/2009 € USD/CAD € Price action on USD/CAD, a daily chart of which is shown, has been descending within a steep parallel downtrend channel since the fourth test of the 1.3 region back in early March. The drop has been especially steep since the swing high to 1.2500 resistance in late April. During the fall from 1.3, price has respected and adhered to established horizontal support/resistance levels rather accurately. Recently, the pair has dropped all the way down to approach yet another key support level, this time around the 1.1450 region, before rebounding. After this rebound, price currently finds itself between this important 1.1450 support level to the downside, and upside resistance around 1.1800. At the current juncture, a correction within the context of the steep downtrend is due, as price has reached strong horizontal support as well as the bottom of the downtrend channel. If this is the case, and the correction rises to breakout above 1.1800 resistance, further major resistance resides around the important 1.2000 price region. In the event of a downside continuation that potentially accelerates the steep downtrend, a breakdown below 1.1450 support should target further support in the 1.1300 price region.
James Chen, CMT
Chief Technical Strategist
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