Price & Time: Another Big Support Test For USD/CAD
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- USD/CAD nears key confluence
- Important timing hurdle late next week
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USD/CAD has come under steady downside pressure since failing at price and percentage Fibonacci symmetry near 1.3460 ( 61.8% retracement of 2002 – 2007 decline and 48.6% from 2007 low) late last month. The last time I wrote about Funds (read HERE), I suggested that the severity of the reversal likely depended on how the exchange rate reacted around the confluence of the 50-day moving average, the median line of the late August high and the 61.8% retracement of the of the September range near 1.3180. After stalling out briefly around this key zone, USD/CAD broke below it setting up the latest two big figure slide lower.
The exchange rate once again looks to be approaching an important action/reaction zone as the 1.2860/95 area marks a convergence of the 38% retracement of the May - September advance, the 5th square root relationship of the year’s high and the 127% extension of the late September advance. If the decline is going to stall out then this is a fairly clear spot from where it should try and do so. A clear break below 1.2860, on the other hand, makes USD/CAD vulnerable to another sharp decline.
From a timing standpoint, late next week looks like the next real important window for USD/CAD as a variety of relationships are set to converge around there. However, today and Thursday look potentially significant in a very short-term sense.
--- Written by Kristian Kerr, Senior Currency Strategist for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.