Hi all,

A quick follow up to the USD/CAD Triangle formation I mentioned yesterday (see that article here). Well a breakout did occur yesterday as I thought, but it turned to be an upside break of the descending triangle rather than the downside break I anticipated, unfortunately I was not online to take advantage of the breakout of the formation. The move upwards failed to break resistance at 1.1651, turning the descending triangle formation in to a rectangle instead and confirming a double top (see the chart below) to match the already existing double bottom.

I, perhaps have been a little hasty, but I am short on it from 1.1628 with a stop above that resistance at the moment, and I expect that support around 1.1550 to be taken by the end of the week. Remember, canada is one of the big oil producers, and with problems with supplies from the middle east, and further rises in crude oil prices, we should see a strengthening of the canadian dollar as energy demands increase during the US winter. If the USD/CAD pair does move lower, it is in alignment with the current underlying downtrend seen on the daily charts since May last year.

It is not often I take fundamentals into account when placing trades, but the technicals and fundamentals seem to match up nicely this time, still whether the market agrees or not is something different all together.

Happy trading!

This entry was posted on Wednesday, January 18, 2006 at 12:48:00 PM. You can skip to the end and leave a response.