USDCAD- Having following through lower on its Monday weakness to test a low of 1.0408, we continue to see downside pressure towards its Jan 12’10 high at 1.04111 with an eventual break envisaged. A decisive violation will set the stage for a push lower towards the 1.0219/04 levels where a breach will resume its medium term weakness and open the door for declines towards its psycho level at 1.0100 and then its big psycho/parity level at 1.0000. The implication of this occurring is that it will nullify USDCAD’s bottom forming process now in place. Its daily RSI is bearish and pointing lower supporting this view. On the other hand, the pair will have to firmly break and close above the 1.0779 level, its 2010 high to halt its current downside weakness and triggering further corrective recovery towards its Dec 01’09 high at 1.0867 which should validate its double bottom pattern and create scope for further strength towards the 1.0991 level, its Sept 27’09 high ahead of the 1.1123 level, its Aug 17’09 high.
Disclosure: no positions