Forex Technical Update
USD/CAD 1H Chart 9:29AM EDT 5/16/2012
The USD/CAD finally breaks above the 1.0050-1.0060 resistance, suggesting a bullish trend developing after a period of sideways trading below 1.0050. Looking at the 1H chart we see that the previous resistance is being treated as the market rejects a throwback attempt.
A throwback to 1.00-1.0020 area would not be against the bull run and could be seen as a level of possible buying into the uptrend.
USD/CAD Daily Chart 9:35AM EDT 5/16/2012
Below 1.00, I think there can be further throwback within the context of a bullish market development. The thing is that we might see some more choppiness before a strong trend pushes on because we don't have any fundamental factor that should weaken the CAD. The slide in WTI Crude oil is about the only correlative factor because the BoC is one of the only central banks even looking at interest rate hike in the coming year.
The daily chart shows that the breakout not only breaks above a key pivot but also above the 200-day simple moving average. The next pivot is around 1.0300. If the market does confirm a breakout, this is the target. A break below parity makes this case weaker, but does not invalidate it. A break below 0.9920 however should suggest reconsideration against the bullish outlook.
Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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