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FXTimes | September 16 2011 10:04 EDT
Previous: USD/CAD Maintains Bullish Structure Despite Failing to Stay Above Parity (9/13)
The USD/CAD has failed to sustain a break above parity several times since August 2011. Rejections from the parity level have lead to a range-bound market below it. However, the bullish prospect had remained. It still remains but, signs are gathering that a deeper decline could arise out of so many rejections to move higher. The structure is looking more and more bearish. In the 4H chart for example, you have the 200 simple moving average finally catching up. This moving average and the 0.9830 pivot make an important support zone. In fact a break below confirms a head and shoulder formation seen in the 4H chart. Furthermore, the RSI breaking below 40 shows lack of bullish momentum, and if it pushes below 30, the market would have introduced bearish momentum.The daily chart shows two strong attempts across parity that failed. With the second attempt higher, but the corresponding RSI lower, the USD/CAD also shows a bearish divergence. The 0.9723 level, near the 50% retracement level at 0.9716 reflect the base of a double top formation. If the head and shoulder forms, breaking below 0.9830 and then breaks below 0.9723, we have topping action galore, because of the double top as well as the break back below the 200 simple moving average. In the short-term this would open up 0.9640 (61.8% retracement), and then 0.9540 (78.6% retracement), and the 0.9406 2011-low.
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Fan Yang CMT
Chief Technical Strategist
FXTimes
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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