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Analysis: A Sign of Broader USD Strength or Just a Rogue Move?

Analysis: A Sign of Broader USD Strength or Just a Rogue Move?

2013-08-07 18:47:00
Kristian Kerr, Sr. Currency Strategist
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We have been looking for a resumption of the broader USD uptrend in place over the past few months. It has so far failed to materialize with many currencies now trading at or near multi-week highs against the Greenback. One of the few pockets of USD strength has been against the Canadian dollar with USD/CAD trading to its highest levels in almost a month on Wednesday. The 1.0425/40 resistance area tested on Wednesday looks quite significant from a Fibonacci perspective as it marks a clear convergence of various key retracement levels including the 50% retracement of the July range, the 38% retracement of the mid-June to July advance and the 78.6% retracement of the decline from the 2011 high to the 2012 low. Normally against such a strong resistance zone we would be looking to sell, but with the broader trend still bullish and the cycle picture now turning positive the zone looks like a clear upside pivot that should spark a bout of decent upside momentum if it is overcome. We like buying USD/CAD on a stop just over today’s high of 1.0445.

USD/CAD Daily Chart: August 7, 2013

Range_funds_body_Picture_3.png, Analysis: A Sign of Broader USD Strength or Just a Rogue Move?

Charts Created using Marketscope – Prepared by Kristian Kerr

Key Event Risks in Coming Sessions:

Range_funds_body_Picture_2.png, Analysis: A Sign of Broader USD Strength or Just a Rogue Move?Range_funds_body_Picture_1.png, Analysis: A Sign of Broader USD Strength or Just a Rogue Move?

LEVELS TO WATCH

Resistance: 1.0425 (Fibonacci),1.0440 (Fibonacci)

Support: 1.0385 (Fibonacci), 1.0345 (Week-to-date-low)

STRATEGY – Buy USD/CAD on a Stop over 1.0445

Entry: Buy on a move through 1.0445

Stop: 1-day close below 1.0385

Target 1: 1.0550

Target 2: 1.0600

--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com

Are you looking for other ways to pinpoint support and resistance levels? Take our free tutorial on using Fibonacci retracements.

To contact Kristian, e-mail instructor@dailyfx.com. Follow me on Twitter at@KKerrFX.

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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