The Canadian Dollar gained ground again against is southern cousin the US Dollar on Friday after Thursday's market movement printed a bearish pin bar on the Weekly R1 at 1.0215. The CAD climbed 54 pips to close at 1.0145 and has been retracing slightly since the market opened in Asia, although it was a bank holiday in Japan. The USD/CAD daily chart shows that the pair has been trading in a descending channel since making a new high for 2012 on June 04. With the close of the last daily candle, the pair has also closed well below the 62EMA and the Weekly Pivot at 1.0171. One scenario is that we see the pair make a double bottom at the previous weeks low of 1.0098 which sits just above the Weekly S1 at 1.0095. If that level is breached we should see prices fall back to the April highs at 1.0051 and the bottom of the channel, at which point a nice swing trade to the upside might be a possibility. The Canadian economy is relatively strong, especially compared to the US, and when we factor in the possibility of Quantitative Easing in QE3 it is not unreasonable to expect this pair to continue lower.
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