(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; uptrend lines in green; downtrend lines in red; Fibonacci retracements in grey; 50-period simple moving average in light blue.)

5/21/2008 – USD/CAD – The USD/CAD daily chart, as shown, has been entrenched in a long-term parallel downtrend channel for many years now. Within the context of this channel, price action has consistently been marked by breakdowns below short-term uptrend support lines (represented on the chart by the green lines). The current situation may be no different. After breaking down below the latest short-term uptrend line yesterday, the pair is poised for a continued decline (Canadian strengthening), especially with oil near record highs. If this breakdown indeed follows through to the downside in the direction of the long-term trend, as might be expected, the next major support resides in the 0.9700 region.

James Chen

Chief Technical Analyst

FX Solutions

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.