USD/CAD 1H Chart 4:35PM EDT 1/23/2013
Range Breakout: The consolidation range we saw yesterday first broke to the downside, but price action pulled back immediately and showed that it was a false breakout during the 1/23 US trading session. In the previous USD/CAD update, I noted that a break to the downside is against the trend in the 1H time-frame while the bullish break is with the short-term trend. Therefore, if you followed trend-following bias, a failed trade to the downside, would easily have been covered with the so-far successful break to the upside.
Trendline break, parity: Also, I noted that the upside break is a break above a falling trendline seen in the daily chart. The 1.00 psychological level was anticipated as a challenge, and the market indeed stalled there after the break. Now, further extension above 1.00 needs to test 1.0055, and a break above that brings further bullish outlook in the USD/CAD, opening the May 2012 resistance pivot at about 1.0445. You can also say that 61.8% retracement at 1.0130 is a more conservative bullish target. Maybe we need further evidence that the market wants to stay above parity (by testing it as support) to give way to more bullish outlook.
USD/CAD Daily Chart 4:43PM EDT 1/23/2013
Fan Yang CMT is the Chief Technical Strategist, trader, educator and a of the main contributors to FXTimes – provider of Forex News, Analysis, Education, Videos, Charts, and other trading resources.
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