USD/CAD 4H Chart 8/7/2012 9:05AM EDT
The USD/CAD continues to dig below the parity (1.00) level, and is making a new low for August during the 8/7 US session. As we fall lower in a sort of declining wedge pattern, price is meeting the pattern support, which is roughly in the 0.9950-0.9960 area. The 1H RSI reading is also at 30, which is oversold in the near-term, but also reflecting a bearish momentum developing in the short-term since the sharp fall last Friday (8/3).
We might get some support here around 0.9950, but we should probably consider the 1.00, parity level as a possible resistance especially if the market is to extend the bearish outlook.
If you look at the declining trendline in the daily chart going back to May, you notice that price action has been accelerating past it. It may be appropriate to adjust the trendlines, other known as speedlines, to a sharper pace. If the bearish outlook does extend, we should consider the 0.98, 2012 low as a key support.
It should be noted that the market in the daily chart is trendless, or side-ways. The whipping back and forth among the moving averages as well as between price action and the MAs reflect this. Therefore, the further the market moves from the 200-day SMA, the more tension it has to pullback toward it.
USD/CAD Daily Chart 8/7/2012 9:10AM EDT
Fan Yang CMT is a forex 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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