The pair is on the verge of retargeting its big psycho/parity level at 1.0000 as a follow-through lower on its Monday losses continues Tuesday.
We expect a breather on an initial test of that level to turn the pair back up and possibly trigger a corrective recovery higher. However, on a decisive violation of that level, we will be looking for a push towards its July 2008 low at 0.9818 and then the 0.9707 level, its February 2008 low. The daily stochastics are bearish and pointing lower supporting this view.
On the other hand, to prevent this from occurring, a total clearance of the 1.0219/04 levels and the 1.0301 level, its March 26, 2010 high must be established to create scope for a more corrective recovery towards the 1.0320 level, its March 11, 2010 high and then its Feb. 22, 2010 low of 1.0368.
A halt should occur at that level and turn the pair back down in line with its larger downtrend at that level. On the whole, USD/CAD retains its overall bearishness and continues to aim at the 1.0000 level and beyond.
Mohammed Isah is a technical strategist and head of research at FXTechstrategy.com, a technical-research Web site. He has been trading and analyzing the foreign exchange market for the past seven years. He formerly traded stocks before crossing over to the forex market, where he worked for FXInstructor LLC as a technical analyst and head of research before joining FXTechstrategy.com. He has written extensively on the forex market and technical analysis and his articles have been featured in The Technical Analyst Magazine, The Forex Journal Magazine, The International Business Times and FXstreet.com. At FXTechstrategy.com, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces
for his subscribers. He provides full coverage of the forex market with specific focus on G10 currencies as well as the commodities markets, with focus on five key commodities.