Forex Strategy: USD/CAD Breaks Out Following Bullish Engulfing Formation
- USD/CAD Technical Strategy: longs preferred
- Range on the daily broken (1.0900 – 1.1200)
- Absence of bearish reversal signal opens further gains
USD/CAD has broken out from its recent trading range between 1.0900 and 1.1200 (see daily). The push above resistance comes following a Bullish Engulfing formation near support at 1.1050. In the absence of a bearish reversal signal further gains may be possible. While the next definitive level of resistance is offered by the July 2009 high near 1.17250, expect some interim selling pressure at psychologically-significant levels including 1.1300.
USD/CAD: Breakout Opens Further Gains
Daily Chart - Created Using FXCM Marketscope 2.0
The potential for an intraday bounce for USD/CAD was signaled by the Bullish Engulfing candlestick pattern pictured in the four hour chart below. The formation was made more noteworthy by its appearance near the 61.8% Fib Retracement level. Following the upside breakout a bearish reversal signal remains absent despite some resistance sitting at 1.1260. This suggests further gains may be possible in the session ahead.
USD/CAD: Powers through Prior Range-Top
4 Hour Chart - Created Using FXCM Marketscope 2.0
By David de Ferranti, Market Analyst, FXCM
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