Forex Technical Update
The USD/CAD has been trading in a triangle. There is an inner bound support and an outer bound one. Right before the new year, the market bounced sharply off the inner support but failed to sustain the rally above the 200 4H simple moving average, and failed to push the RSI back above 60. As we get into the 1/3/2012 US session, the market has broken the inner triangle support, and is cracking the outer one, though the break is not clear yet. If a rally in the US session brings the market above 1.0220, the break of triangle support would have been avoided and a test of triangle resistance could be next.
To the downside, the next support pivot is 1.0050. If the market gets to 1.0050, the triangle support would be broken, and the RSI in the daily chart would likely fall below 40, which reflects loss of bullish momentum established September of 2011. This opens up support pivots near 0.9990 as well as the 200 day SMA, which is near 0.99 and 61.8% retracement.
A break below 0.99 along with a failure to break back above 1.0 would be very clear confirmation of the bearish intent toward 0.97 and 0.9430 area.