USD/CAD 1H Chart 7:37AM EDT 1/29/2013
1.01, double top: USD/CAD has been rallying sharply since rounding out a bottom mid-January. The 1H chart shows a bullish market via alignment of moving averages (until now), and the RSI holding mostly above 40 and tagging 70 represents bullish momentum. However, as the market failed twice to push above 1.01, the lower moving averages are converging as the market consolidates, and the RSI is testing the 40 level, below which would show loss of bullish momentum. Price action also shows a completed double top, so we are at the bring of turning sideways consolidation into more of a bearish correction.
Target: The bearish scenario is in place, unless there is a push during the 1/29 US session back up above 1.0075, which should cross above the middle of the consolidation range, putting the pressure back to the upside. Otherwise, a breakout target using the width of the range, projects to almost 1.00, parity. As this scenario would still have price trading above the 200-hour SMA, it is not much of a game changer, but within the context of a correction against the last 2 weeks of bullish trend.
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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