USDCAD—resistance

My long from 1.0460 stopped out at breakeven. I rebought this morning at 1.0524. The pair did attract sellers as I wrote it would at its high of 1.0573 earlier but it hasn't substantially dropped back and momentum, as represented by RSI, looks good. Depending on how you look at the chart (and here is where pattern interpretation becomes very subjective) it's either coiling in a symmetrical triangle on the hourly chart, forming a diamond pattern, or forming a head and shoulders (which won't be confirmed unless it drops below the trough at 1.0498). If it's a diamond pattern the formation is relatively rare and it also leads to quick moves when it breaks out so the stop should be tight. This it can be, either below the triangle or below the overnight low of 1.0498 (which is also the potential H&S low). The pair is violating both an RSI and price uptrend line as well so it's questionable whether the correction is quite over.

If it is, USDCAD still must get through that resistance at 1.0573/81. It's strong resistance which is near the the 5/26 low, a fib confluence area and polarity. Additional resistance is at 1.0610, 1.0719 and 1.0855. Support is at 1.0498, 1.0423/13, 1.0398, 1.0274, 1.0247 and 1.0100.

Here's the hourly 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.