Forex Technical Update August 4, 2010
Gold and CAD Overshadows Greenback Strength
- Daily and 1H: Today, everyone is seeing the greenback attempting a comeback across the board. Its a first step, and I am not completely convinced yet of the recovery of USD.
- But, another story may miss the headlines.
- Gold and Canadian dollar is strong as well, overshadowing the USD rally.
- The USD/CAD continues to decline into the projected target zone just below 1.02.
- Momentum in the daily suggests further decline towards parity is possible as the RSI breaks below 40.
- 1H chart also shows continuing bearish strength.
- However, if you see USD/JPY continue rallying, and EUR/USD continue declining, then we may see support here as the market already reached an important support zone.
- On the other hand, A rally in the USD/CAD may be the final confirmation for a strong dollar recovery, and confirms strong declines in the EUR/USD, and GBP/USD, as well as strength in the USD/JPY.
- Daily: I mentioned in yesterday's video update that gold was a commodity to monitor for confirmation of USD recovery. If gold declines further against the dollar, it will show that the USD is the preferred safety haven, not because gold lost its luster, but because it has been considered overbought, and other conditions may benefit the dollar as well, as it is oversold.
- The RSI here broke below 40, and now rallies above 50, above the previous high near 48.
- The price level however has not joined, and therefore we may be developing a negative reversal, IF the market does not break above 1220.
- Then, if XAU/USD indeed declines, the USD/CAD is mostly likely rallying, and the greenback should enjoy a bit of a comeback.
Commodity Trading Advisor
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