USDCAD: Looking for Long Entry
USDCAD produced a bullish inverse Head and Shoulders chart pattern above the May low, confirming a reversal with a break above the formation’s neckline at 0.9667. The pair is pulling back from falling trend line resistance set from mid-Oct’10 but I expect a reversal higher as risk aversion returns as the expiry of QE2 looms ahead. USDCAD shows a strong inverse correlation with the S&P 500 and move lower in US shares ought to push the pair higher. I will look for a daily close above 0.9760 to enter long.
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