USDCAD—testing breakout point

Even with the push up to 1.0306 on Friday, we've had five days with a close beneath the breakout point. It appears to be retesting it at the 1.03 level. It's definitely hesitating. The pair has also closed below its RSI uptrend line on its daily chart. One could try a small short here with a tight stop above the price line.

On the weekly chart, the pair formed a doji with last week's low. That low (1.0108) has to hold for there to be continued upward price movement. A dip (or close) below it will invalidate it. The triangle on the weekly chart, after a downtrend, suggests there could be continuation. However, the longer term uptrend line from the low of 2007 (in green on the chart below) is coming in just above parity. From an Elliott Wave perspective, wave two could be ending as well which implies longer term positive price movement. Certainly a lows near parity would be a buy signal for me.

The August doldrums may mean sluggish price action could continue for a few weeks with largely sideways movement. If the pair makes it back into the triangle and moves upward, 1.05 will probably contain it.

Here's the weekly 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.