Forex Technical Update
USD/CAD 1H Chart 8/30/2012 7:40 AM EDT
Yesterday's (8/29) rejection at some resistance factors did not follow through with further bearish action in the USD/CAD. Note that the RSI remained above 40, which means that momentum was still in consolidation mode. Then the 8/30 session pushed the pair above 0.99 and other resistance factors pulling the RSI to 70 by US trading. This shows that the market is in range-bound momentum as the RSI fails to show development of directional momentum.
Also note that the 200-Hour SMA is essentially flat, and all the moving averages are whipping back and forth with each other and price, more signs of a flat market. The range is between the 0.9950 handle and the 0.9840 level, about 100 pips.
While signs point to a sideways market, some might interpret this second swing up from 0.9840 as a completion of a harmonic retracement pattern, specifically the Gartley. Maybe we do get a swing back toward the 200-hour SMA, maybe even across it to clear below 0.99. However, a push above 0.9925 is likely maintaining the focus toward 0.9950 range resistance.
Basically you are getting a bearish continuation suggestion from a retracement pattern within a sideways market. Do you trust harmonic patterns over other technical signs of a sideways market? Don't forget that the Jackson Hole Symposium will be going on from today 8/30 to Saturday 9/1. Before the meeting can provide clues for the market, price action might be a little wacky, but initially might be against the medium term moves, which in USD/CAD's case has been bearish.
Fan Yang CMT is a forex trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
Information and opinions contained in this report are for educational purposes only and do not constitute an investment advice. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness. FXTimes will not accept liability for any loss of profit or damage which may arise directly, indirectly or consequently from use of or reliance on the trading set-ups or any accompanying chart analysis.