Forex technikal and fundamental analysis: FX Path

Jun 14, 2011

FX Path

USD/CAD Breaks Down to Continue Bearish Trend

Posted: 14 Jun 2011 01:19 PM PDT

USD/CAD (daily chart) as of Tuesday (6/14/2011) has broken swiftly down to break below a rising parallel channel that represented a bullish correction within a long-term bearish trend. This breakdown has brought price down to hit key support around the 0.9680 price region. The bearishness represented by this breakdown occurs after price action respected with a clear shooting star candle both the 0.9850 resistance level and an important downtrend resistance line extending back to the October 2010 high. This breakdown could presage a continuation of the bearish overall trend with an immediate downside target around the 0.9600 price region, which is the 61.8% Fibonacci retracement of the noted bullish correction. Further to the downside resides a key support target around the 0.9450 area low extreme.

(Click on chart to enlarge. Forex chart key: price on 1st pane, Stochastics 14,3,3 on 2nd pane; horizontal support/resistance levels in black; uptrend lines in green; downtrend lines in red; 50-period simple moving average (SMA) in orange; 100-period SMA in brown; 200-period SMA in dark blue; Fibonacci levels in magenta.)

James Chen, CTA, CMT
Director of Technical Research and Education
FXDD