After posting a closing price reversal bottom on Monday at .9945, the March Canadian Dollar surged to the upside Wednesday, taking out the last swing top at 1.0090 and reaffirming its current uptrend. The strong close put the currency in a position to challenge the September 11 top at 1.0187.
Overnight the Canadian Dollar is trading inside of yesterday’s range. A failed test of the uptrending Gann angle at 1.0135 pulled the market back inside of the channel up chart pattern created by a pair of uptrending Gann angles at 1.0045 to 1.0145 today.
The combination of the uptrending channel and the series of higher-tops and higher-bottoms mean that the trend is strong. The first sign of weakness will be a close under the lower-boundary while a change in trend to down will occur following a penetration of the swing bottom at .9945.
Traders should continue to look at the long side of the market until support is violated; however, they should remain cautious about buying strength because of the possibility that selling pressure will emerge following a test of the September 2011 top at 1.0187.
Fundamentally, a combination of end-of-the-month buying along with optimism over the fresh injection of liquidity by the European Central Bank helped fuel Wednesday’s surge. However, traders backed away from triggering a complete breakout to the upside because of comments from U.S. Federal Reserve Chairman Ben Bernanke. Testimony by the Chairman seemed to indicate the Fed was not considering another round of financial stimulus.
Next week the Bank of Canada will meet to decide its bench mark interest rate. Monetary policymakers have been holding rates steady at 1.00 percent since September 2010 because of European concerns despite the fact that the country’s annual inflation rate has exceeded the central bank’s 2.00 percent target for 14 straight months.
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March Canadian Dollar in Position to Test 1.0187
Published 03/01/2012, 07:22 AM
Updated 05/14/2017, 06:45 AM
March Canadian Dollar in Position to Test 1.0187
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