By: Mike Kulej
The Canadian Dollar was getting stronger for the better part of 2010. In the later part of the year, the USD-CAD found a firm support at the parity level. This level held for a few months, but was eventually broken on 12.31. and the price fell to 0.9887.
During the last few days, this pair rebounded to some degree. However, it failed move above the parity, which appears to have changed into a resistance. Now the USD-CAD is drifting sideways, within a narrow band between 0.9900 and 1.0000. It is only a matter of time before a new major price swing begins.
Since the trend before the current consolidation was down, a bearish continuation is more likely than a reversal. However, either possibility must be confirmed by a strong close above/ below the resistance/support. It is not unusual to have numerous breakout attempts before a firm trend is established.
Technical indicators should also show increased activity. The ADX indicator needs to turn up, show higher reading, in order to confirm the new developing trend, while the MACD should move away from the zero line, its neutral reading. With the general volatility among currencies at elevated levels, we can expect the USD-CAD to start moving again soon.