ForexPros Daily Analysis July 14, 2011
The USD/CAD is approaching the weekly support
The Canadian keeps its volatile move of the last few weeks, though it seems that it was calmed a little bit this week. The 50 EMA crossed below the 20 EMA, which is a positive sign for the CAD. There is a support around 0.955-0.956 and the long shadow that extends from Monday’s candlestick, increases the chances for continuation of the declines. A strong break-down might get to 0.944, which is a strong support on the weekly chart. A break-down there might cause sharper strengthening of the CAD, though in the short-term the currency will be influenced by Wall Street, so declines there might support the USD.
The Australian had corrected in the few days of the week, mainly because of Wall Street plunging, but it struck yesterday and got close to the resistance at 1.08, which I have been following for few weeks. The more the resistance line goes through many points, and the more it lingers, so we say that the resistance is stronger, and the odds for a break-up are reduced. However, a real break-up here will trigger many automatic orders and cause a powerful ‘short-squeeze’. The target for this potential break-up, as I mentioned in the recent analysis, is at 1.10. Watch out from false –break; such a tempting pattern could be a trap.
Forex Trading analysis written by Bastian Rubben for Forexpros.
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