USD/CAD 4H Chart 8:10AM EDT 10/26/2012
Consolidation: The reaction to a relatively dovish BoC noted in the previous update, did not extend and the USD/CAD consolidated instead, as you can see in the 4H chart. It is now heading toward the upper area of the consolidation, and testing a declining trendline resistance that has held so far. It should be noted that the momentum in the 4H chart is bullish as the RSI has tagged 70 and held above 40.
Breakout scenario: A break above the trendline just exposes 1.0 in the near-term. A break above parity will then introduce a bullish outlook. The break above parity, and then the 200-day SMA exposes the 1.0440 June high/resistance pivot. Before that, there are the 50% retracement at 1.0036, and the 61.8% retracement at 1.0132 as near-term and short-term resistance factors.
Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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