Wednesday October 27, 2010 - 04:15:23 GMT
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Forex Hound - www.forexhound.com
Stocks Eke Out Small Gains, Canadian Dollar Feeling Pressure
equity markets eked out small gains after early session weakness. The stronger
Dollar overnight helped pressure equity markets, but a better than expected
Case-Shiller Home Prices Report helped the markets recover from their lows.
Technically there is not much to report. The main uptrend
remains intact. Investors have been reluctant to chase this market higher,
preferring instead to buy breaks into support. Although the rallies have been labored,
they arenâ€™t indicative of topping action, only that investors are being careful
with their investment Dollars at current levels.
Fundamentally, the recent decision from the Bank of Canada
to refrain from an interest rate hike and its forecast for a slow down in
economic growth may be pressuring the December Canadian Dollar.
Furthermore, the rally began shortly after the Loonie
briefly penetrated parity, which is typically a natural selling area.
Additional reselling may be being supplied by weaker gold and crude oil prices.
Technically this currency pair has formed a resistance zone
after a few tests of a 50% level at .9815. This price is inside the main range
of 1.0005 to .9625. A failure to hold this price could mean a test of the Fib
retracement level at .9860 however a downtrending Gann angle at .9825 may
prevent this market from reaching this level.
On the downside, further confusion over how much
quantitative easing the Fed will implement and how it intends to distribute the
money may be bearish for the Canadian Dollar. This could trigger a break into an
uptrending Gann angle at .9746, before a further decline into a 50% level at .9636.
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