Forex Technical Update
- The USD/CAD in the 1H chart is in a declining channel that so far is categorized as a correction, because the previous rally was a 5-wave rally, suggesting it was an impulse wave up.
- So far, the market has respected the channel resistance, and a double bottom attempt is in suspense.
- The RSI's ability to kiss 30 kills the bullish momentum and establishes a bit of bearish momentum in the short-term. However, the market is still trading above the 200SMA, and the 61.8% retracement level.
- If the market breaks above 0.9865, we would be breaking above the channel resistance as well as an important pivot seen as support earlier in September.
- This also forms a double bottom and targtes 0.99 in the short-term. The bullish scenario is quite limited, but a conventional breakout of this type of channel targets the origin, which is at 0.9965.
- Only a break above 1.0 opens up a medium term bullish outlook. Otherwise, traders will be looking to get out quickly before testing the parity level.
Fan Yang CMT
Chief Technical Strategist