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USDCAD Weekly
By: ForexManage - 02-04-2008
0votesThe Canadian currency is thought off as a commodity currency. By being so, it should have a leveraged behavior against the USD. Let's look at the weekly chart to see what this pair is doing these days:
1. As a general rule, when you have a 1-2-3 trend lines configuration (in blue) you can be quite sure that you are at the end, or near the end of a trend. This case was no exception. When trend line 3 was crossed over, we knew that the exhaustion move down was finishing.
2. The move up that started was a bit surprising. In view of the fact that nobody wanted to buy the pair before, the buying frenzy caught us by surprise. Only when the pair reached the ever performing 38.2% Fibonacci level, it did take some kind of respite.
3. Since then, the pair is moving up and down, reaching sometimes the 50% retracement as an upper limit and the 23.6% retracement as the lower limit of a big trading range. This consolidation type of action is confined inside an ascending channel, which is defining the general trend – Up.
4. By the general conventions of Technical Analysis, the expectations are that the price will emerge from a consolidation pattern the same way it entered the pattern. In this case, up.
5. The indicators, MACD histogram and RSI, are well beneath the overbought levels that should put us in a caution mode.
Conclusion:
The USDCAD pair is in a big trading range that should resolve to the upside. The depth of the range should be the target of the immediate breakout. When RSI should reach 70 and more, we could get the first sign for an overbought situation, but by then, we expect the pair to reach, at least the 61.8% retracement level (near 1.08).
Next Analysis: Bernanke a step closer to conceding recession. Focus shifts to Payrolls data.Content Provided by:
ForexManage
ForexManage focuses on the development of advanced, real time, online foreign exchange trading and risk management solutions for the banking industry and their customers. The company was founded by foreign exchange traders who use their extensive experiences and intimate knowledge of the needs of th
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