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Forex Analysis: USD/CAD Tentative Breakdown Below Support

USD/CAD Daily Chart

USD/CAD (daily chart) has tentatively broken down below the support confluence provided by the important 0.9900 price level and the key 50-day moving average. This bearish move occurs after price had been consolidating in a tight sideways range just above this support confluence for the last two weeks. This also occurs after price broke down two weeks ago below a bullish support trend line extending back to the September 0.9630 low, after showing a clear bearish divergence between price and Stochastics in the first half of November. Now that the 0.9900 confluence of support has tentatively been broken down, the directional bias has shifted further to the downside, with nearby potential support residing around the 0.9800 price region. In the event of a further breakdown below that level, price could move towards a potential re-test of the September 0.9630 low.

James Chen, CMT
Chief Technical Strategist
FX Solutions

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James Chen

James Chen

James Chen is Chief Technical Strategist for City Index Group. He is also a Chartered Market Technician. He is the author of the books: "Essentials of Foreign Exchange Trading" (John Wiley & Sons, 2009) and "Essentials of Technical Analysis for Financial Markets" (John Wiley & Sons, 2010). Mr. Chen writes currency analysis, leads forex trading seminars and has appeared in numerous major financial media outlets, including CNBC, Bloomberg TV, Forbes, Reuters, Dow Jones, and the Associated Press.