Since having a decent rally capped at 1.0853 on May 25, 2010, usdcad has been in a downward trend which has formed a beautiful falling wedge. This is a chart pattern that indicates a bullish move is imminent. I like to use a close line vs. candles to identify horizontal support and resistance and chart patterns such as a falling wedge, because it helps to filter out the noise of long wicks which signal false breaks. Here, we see usdcad is leveling along the bottom portion of the wedge which acts as support on its way down. A safe entry would be after we see a close above 1.0050 which would be a print above the upper trendline resistance. As equities advance has been limited, a sell off in JPY cross carry trades and repatriation of US dollars could be the catalyst.Monday, February 7, 2011
USDCAD Selloff Becoming More Shallow; Using Close Line To Filter Out Noise
Since having a decent rally capped at 1.0853 on May 25, 2010, usdcad has been in a downward trend which has formed a beautiful falling wedge. This is a chart pattern that indicates a bullish move is imminent. I like to use a close line vs. candles to identify horizontal support and resistance and chart patterns such as a falling wedge, because it helps to filter out the noise of long wicks which signal false breaks. Here, we see usdcad is leveling along the bottom portion of the wedge which acts as support on its way down. A safe entry would be after we see a close above 1.0050 which would be a print above the upper trendline resistance. As equities advance has been limited, a sell off in JPY cross carry trades and repatriation of US dollars could be the catalyst.
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