USD/CAD – Will 1.05 Hold?
Thursday, September 2, 2010
, Posted by Usman Ali Minhas at 8:31 AM
USD/CAD – Will 1.05 Hold?
- Day and 4H: The USD/CAD was not able to break above channel resistance, and is attempting to top off. The 1.05 is the base for the possible double top developing.
- The 4H chart shows the reading struggling to go below 40. A break below 40 can invalidate the bullish signal of the RSI breaking above 70 on August 24.
- You can read more about the downswing projection in yesterday’s USD/CAD update. I will now look at the lower time-frames to stalking the attempt to break 1.05.
- 1H: The 1H chart shows a bullish divergence, and also some bottoming action at 1.05 suggesting a rally.
- If there is a rally, we can expect resistance at 1.0550/1.0560 area. This is 38.2% retracement of the downswing and also 150% expansion of the previous upswing.
- However, this could be a corrective wave developing and should have one more upswing, which may bring the pair closer to 1.06.
- The main thing is to watch to see if the RSI can remain below 60. In fact, if the price level tops off before breaking the previous high at 1.0545, there is a negative reversal. However I suspect the correction to the downswing from 1.0670 to 1.05 is not over.
- If the market can sustain a break above 1.0550, it may be heading back to 1.0670.
- As we near Non-Farm payroll event risk on Friday, I suspect the market will not break below 1.05 with force, so there may be some “scalping” approaches treating this as support, and target near 1.0580 (50% retracement) or 1.06 (61.8% retracement).
- If there is a break, I would anticipate a pullback before the NFP, then I would wait to see the reaction after. If it becomes volatile, I will wait for it to settle.
- If the market instead confirms a break below 1.05, it is projected to 1.03260 area (61.8% retracement in the day chart).
