(Chart courtesy of FX Solutions' FX AccuCharts. Price on 1st pane, Slow Stochastics on 2nd pane; downtrend lines in red; uptrend lines in green; 200-period simple moving average in light blue.)
6/05/2008 – USD/CAD – Within the current long-term downtrend channel on the USD/CAD daily chart, as shown, price has just reached a critical resistance level. The most recent upturn initiated last week has pushed price up against two significant resistance factors. The first factor is represented by the short-term descending channel (shown on the chart by the short parallel red lines). Price has just reached the top resistance line of this short channel. The second factor is the latest intra-channel uptrend line (represented by the rightmost green line) which was broken down early last month. Price can now be considered to have initiated a pullback up to the trendline (now resistance) once again. Of course, this pullback would not be confirmed unless the lowest low after the breakdown is eventually surpassed. Stochastics are in extremely overbought territory, lending strength to this bearish outlook. Barring any fundamentally-driven breakout above the current resistance, an impending turn back down at or near this resistance should target major support in the region of the lowest low after the breakdown – around 0.9820.
Chief Technical Analyst
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