Forex Technical Update
The USD/CAD has been persistently bearish as seen in the 4H chart trading in a declining channel. The RSI has been held under 60 and has been able to tag 30, reflecting the continuous bearish momentum. As we gear up for the 2/7 US trading session, the pair is trading at the resistance trendline of the declining channel. A break above parity (1.0) will be a clear sign of a bullish breakout. It will also break the 100 simple moving average in the 4H chart (200SMA in 1H chart).
A significant momentum breaker will require the RSI to break above 60 in the 4H chart. Otherwise, the correction may be flat instead of a sharper retracement. For a flat correction resistance at 1.0063 (38.2% retracement of the channel), could be important. It was also resistance on Jan 30, after being support during Jan. 23 and 19. This is also the December 8 low and support pivot.
Then the 50% retracement is at 1.0105, and 61.8% retracement at 1.0147. Then if the market is able to bring the USD/CAD back down below parity (before pushing past 1.02), we should be resuming the downtrend first to test 0.9927, for a break to open up the next important support pivot in the 0.9883-0.99 area (also 61.8% retracement of the 0.9405 to 1.0656 bull run).
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Fan Yang CMT is the Chief Technical Strategist for IBTRADE, educator trader and main contributor for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.