Forex Technical Update
USD/CAD Chart daily 5/24/2012 9:46AM EDT
The USD/CAD indeed pushed to the 1.03 level after breaking above the 1.0050-1.0060 resistance. The 1.0280-1.0315 area represent resistance pivots back in January 2012, with 1.0315 being the 2012 high.
Although this resistance area sent the market down to our 2012 low near 0.98, we should have a different expectation this time around because this time we are attacking this level with bullish momentum. (The RSI reading in the daily chart is above 70, where as the last time it was neutral, near 50.
If we anticipate a reaction, I think the maximum expectation we can have for the moment is down to 1.0150. This is a recent support, and was actually where the market initially dropped to when falling from the 1.0315, 2012 high.
USD/CAD Chart 4H 5/24/2012 9:50AM EDT
The 4H chart shows a bearish divergence with the RSI. It also shows the market tagging the upper bollinger band which is 3 standard deviations from the 200 SMA here. The current rally into the 1.0280-1.0315 zone is failing to tag the BB, and we can say it has a bearish divergence relative to the BB as well. These are initial signs of consolidation.
Fan Yang CMT is a trader, analyst, educator and Chief Technical Strategist for FXTimes - provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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