Forex Technical Update
Parity and Double Bottom Ceiling:
- The USD/CAD is in a very sharp rally that is stalling at the 1.0, parity level.
- There is a double bottom forming in the daily chart as well, and the 1.0 level is the ceiling above which, the formation is complete.
- Note also a break already above the declining trendline, and the 200SMA. Also momentum is definitely bullish in the medium term as the RSI pushes above 70.
FOMC Risk Event
- Now we await the FOMC announcement and Bernanke's statements.
- If the market reverses, but remains above 0.98, we can still be bullish.
- If the market continues higher above parity, the bullish scenario opens up (1.07-1.08 are targets in the medium term).
- However, we might want to wait for a correction before gaining confidence that the USD/CAD has built a bottom.
- A break below 0.9640 can weaken the bullish scenario, and suggest a range-bound market.
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Fan Yang CMT
Chief Technical Strategist