USDCAD—struggling

With highs yesterday and so far today of only 1.0487, this pair is really struggling. This behavior, after having already having broken below the 50% retracement of the up move from January to February 5, could be bearish as it appears it's now trying to retake that level, perhaps for a last kiss good-bye before sinking lower. The long upper shadow on the recently closed 3-hour chart hints it's rejecting the higher price level. It could scale it—this would have been a fake out move, then—but even if it achieves this barrier, it still has significant resistance to overcome. 1.0580 is the daily 13 SMA plus a confluence zone; 1.0593 and 1.0602 are confluence and a downtrend line from early February.

I added to my long position at 1.0462 after the bullish candles late yesterday morning. My original long of 1.0444 survived the last couple of days intact. I'm thinking of moving the stop on the original one to breakeven now that I've seen the overnight action (or lack thereof). I still believe it's possible there may be some active price movement today or tomorrow—alas, I don't know what direction. For new or conservative traders, I'd stay out of longs until this pair closes above 1.0602 with strongly bullish behavior. If it breaks below Tuesday and Wednesday's lows of 1.0411 then one would be safe to be fairly pessimistic and 1.0367, and probably lower, would be a tempting target.

Support:

1.0467
1.0407/11/21
1.0367
1.0312
1.0245
1.0208/25

Resistance

1.0495
1.0500/06
1.0547/79/80
1.0593/1.0602
1.0636/44
1.0771/76/81

Here's the three-hour chart:



© Dianne Fecteau, 2010. No part of this material may be reproduced in any form, or referred to in any other publication, without the express written permission of the author.

My purpose in writing this blog is to show you how one trader, me, makes trading decisions and survives while trading Forex. One of the biggest problems I had when I first started trading was trying to apply the “rules” to actual trades. Another was the psychology—limiting losses and letting profits run. If you study my blog, you’ll see how I deal with both those issues. So my writings are not trade recommendations but rather educational in purpose. You have to decide on your own approach to trading. Remember that trading is risky.