USDCAD: Break Calls For Caution

USDCAD has finally violated its 2009/10 lows located at 1.0219/04 the past week after many failed attempts at and ahead of that zone. With the break occurring on a weekly closing basis and a resumption of its medium term downtrend from the 1.3060 level triggered, risk of further declines could be seen towards the 1,100 level, its psycho level with a cut through the latter exposing the 1.0000 level, which marks its parity/big psycho level. This level may present a significant support if tested and turn the pair back up on a corrective recovery. We are also seeing its congestion lows at the 0.9917, 0.9818 and 0.9703 levels established in July, May and Feb’2008 as key supports if the 1.0000 level is taken out. Its weekly studies are bearish and pointing lower supporting this view. Resistance level is located at the 1.0219/04 levels where a reversal of roles is expected but if that fails to occur, the 1.0320 level, its Mar 11’10 high and then the 1.0368 level, its Feb 22’10 low will be targeted. Word of caution, both our correlation analysis among CAD crosses and commodities as well as some aspects of price action analysis has not confirmed its break. 

 

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