By Mohammed Isah of

The dollar/Canadian dollar currency pair this week violated its 2009/2010 lows located at 1.0219/1.0204 after many failed attempts.

With the break occurring on a weekly closing basis, and with the pair resuming its medium-term downtrend from 1.3060, the risk of further declines can be seen toward the psychological level at 1,100. A cut through there would expose 1.0000, which marks parity and an even bigger psychological level.

This level may present significant support if tested and turn the pair back up on a corrective recovery. We also see lows at the 0.9917, 0.9818 and 0.9703 levels established in July 2008, May 2008 and February 2008, respectively, as key support levels if the 1.0000 level is taken out.

The weekly studies are bearish and pointing lower, supporting this view.

Resistance is located at 1.0219/1.0204, where a reversal of roles is expected, but if that fails to occur, the pair could target 1.0320, its March 11 high, and then 1.0368, its Feb. 22 low.

Even though the risk appears to the downside, there are some red flags to keep in mind.

Normally when a strong support zone has taken a lot of hits like the 1.0219/04 levels did, a break of that zone should come with a lot of price momentum and sellers' conviction.

We think what we are seeing does not match that. Still, we do not fight with price action. That the 1.0219/04 zone was broken and that the pair ended the week below that zone makes the break valid.

However, we have to exercise some caution as we will need a follow-through lower in the coming week to confirm the second stage of that break.

Furthermore, we have done our correlative analysis among USD-CAD crosses, and that exercise is not convincing, because only two out of about six crosses confirmed a break and did so with a lot of price hesitation.

In addition, the commodities -- especially crude oil -- sold off to end the week lower, a sign of nonconfirmation.
Mohammed Isah is a technical strategist and head of research at, 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 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 At, he writes daily, weekly and long-term technical commentaries on currencies and commodities, which are offered to its clients. He also produces The Professional Suite 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.