Tuesday March 30, 2010 - 19:32:21 GMT
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FXTimes: Daily Technical Update USD/CAD Is the Pullback Finished?
USD/CAD: Is the Pullback Finished?
- 4H: The USD/CAD topped off after a bearish butterfly was formed just below 1.03. (Refer to Daily Video Technical Update 3.29.2010: 3rd pair). We saw that the momentum broke below a support, while the market was testing a rising support.
- A look at the moving averages and in this time-frame and the higher
ones suggest that the rally in the past week was just a correction
rally, a pullback, which may have been completed as the market breaks
below the rising trendline.
- Looking at the daily below, we see a61.8% projection to 0.9950, but
we know the 1.0 could be a psychological support and deserves to be
- Daily: I always anticipate 2-swings to a
correction. There are 2 exceptions. 1) When a previous correction is
clearly 2-swings. Then I anticipate every type of correction (flats,
expanded flats, trianglesâ€¦) except the 2-swing zigzag. 2) If the
correction was weak (23.6%-38.2%), and the reversal signal is strong
(approx 2 ATR and/or at least twice the range of previous candles),
then I would believe that there is no 2-swing correction.
- Here we had a 1 swing correction at the end of Febraury. So we pass
exception 1. The market corrected 38.2%, BUT the previous rally candle
on 3/24/2010 was strong, and the reversal signal has yet to close below
that where that candle opened, at 1.0155.
- In the 4H time-frame a close below would equate to a close below
the 61.8% retracement (1.0150) also suggest that the pullback is
- I will continue to stalk the decline. If it breaks, I would still
wait for some kind of rally attempt and I will look for that to be weak
as a confirmation of the bearish outlook.
- On the daily chart above, I included the 2-swing correction
scenario. It is always good to keep the alternative in back of your
mind, even if you are leaning heavily with your original. Besides, we
are still waiting for a break below 1.0150.
- If you are going to be aggressive, a principle is always go with the trend, and the trend has been bearish.
Commodity Trading Advisor
Information and opinions contained in this report are for
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believed to be reliable, author does not guarantee its accuracy or
completeness. CMS will not accept liability for any loss of profit or
damage which may arise directly, indirectly or consequently from use of
or reliance on the trading set-ups or any accompanying chart analyses.
Foreign currency trading is not conducted on an exchange. CMS is
acting as a counterparty to its clientsâ€™ transactions and as a result,
CMSâ€™ interests may be in conflict with its clients. Since CMS acts as
the buyer or seller in the transaction one should carefully evaluate
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Foreign currency trading involves a substantial risk of loss and may
not be suitable for all investors.
All screenshots are made from VT Trader 2.0 and are of actual market data at the time of the screenshot.
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