USD/CAD Surges after Carney’s Dovish Statements

on October 16 2012 9:47 AM

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Forex Technical Update

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USD/CAD 4H Chart 8:50AM 10/16/2012

USD/CAD 10/16/2012 4H chart

Dovish Statement weakens CAD: BoC Governor Mark Carney spoke yesterday, with an apparent dovish tone regarding monetary policy, saying the BoC will be highly accomodative, and hinting that the benchmark interest rate will stay at 1.0% on the Oct. 23 meeting. The USD/CAD which has been trading in a bit of consolidation/congestion, broke out to the upside after Carney’s statements. As the 10/16 US session gets underway, it is about to the October high at 0.9883.

Sideways market? A throwback should probably hold above the 0.9833 pivot to show bullish take-over. The 4H RSI should stay above 40, preferably above 50 after a subsequent throwback. That would reflect maintenance of bullish momentum. Otherwise, we are just in a sideways market in the 4H chart. In fact, the moving  averages suggest we are in a sideways market, so expect some resistance at the 0.9883 pivot.

Targets; trendline: If the USD/CAD has additional bullish strength to extend beyond 0.9885, it will first have the 0.9940resistance and 38.2% retracement as the first resistance. A swing projection pushes toward 0.9970, near a key fallingtrendline that goes back to May, and this year’s high of 1.0441. If the market does indeed make this swing projection, we should monitor the 0.9970-1.00 area for resistance as a completion of an ABC correction and as respect to a fallingtrendline.

USD/CAD Daily Chart 8:55AM 10/16/2012

USDCAD 10/16/2012 daily chart

Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes – provider ofForex 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.

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