(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.
Chief Technical Analyst
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