The USD/CAD, or just plain old Loonie to us Canucks, has broken out of the descending channel it has been running in since the end of May. The pair had been respecting the channel on both the high & low levels until yesterday when price broke below the Weekly S1 at 0.9961 and simultaneously broke the bottom of the channel at the same time. Price has stayed rather bearish today during Asian trading, probably spurred on by the rise of the AUD/USD as the 2 typically mirror each other. Price has also now broken the Monthly S1 at 0.9941 and appears to be headed to the Weekly S2 at 0.9917. Below that we have a technical vacuum down to the Weekly S3/Monthly S2 at 0.9850 +/-. There are other hurdles to the downside, such as the Daily S1 at 0.9929 which has been the low so far today with 1.5 hours remaining before London markets open. If this is the low of the day, we will be looking for resistance at previous support such as the Monthly & Weekly S1's mentioned earlier. Above 0.9961 the previous lows from August 03 will act as resistance before price will have to re-test the Weekly Pivot at 1.0022. Considering the strengthening price of oil, and the Canadian economy being one of the stronger economies in the western hemisphere, it is probable that the price will continue to fall as the Loonie strengthens against its southern cousin.
Happy Trading!