USDCAD—twirp

I don't mean twirp to be testy as in something that's contemptible although the thought crosses my mind. I meant it as twirp—the USD is like a small bird twirping in a tree. Perhaps the bird is about to be devoured; perhaps the tree will fall from the mighty ax that stands in for economic policy these days—QE.

OK, USDCAD broke down below last week's inside week—not good. The low is 1.0082 so far. The key support is the weekly hammer (three weeks ago) at .9981. Below this could see a resumption of the overall downtrend. I'm not convinced this is going to happen, though. For one thing, you have a nice morning star pattern on the weekly chart with that hammer being the middle of the three-candle pattern. Still, convinced or not, the pair needs to overcome 1.0249 and better, 1.0374 to make a credible case for recovery. Waiting to buy is the conservative course here and of course if it breaks that hammer low you wouldn't buy at all.

Here's a 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.

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