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USDCAD: Holding Cautiously Above The 0.9709/20 Zone.

Having rallied and closed above the 0.9709/20 levels, its April 18/May 05’2011 high on Monday, we believe further gains should follow though price hesitation is now seen.

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This development supports its corrective strength started from the 0.9446 level, its 2011 low. Further out, 0.9824 level, its Mar 24’2011 high comes in as the next upside target with a breach turning attention to the 0.9967 level, representing its long term falling channel   top (visible on the weekly chart).

This view remains valid as long as the pair holds above the 0.9511 level, its May 11’2011 high. Its daily stochastic is bullish and pointing higher supporting this view. The risk to this analysis will be a break and hold below the 0.9511 level.

This will open the door for a run at its 2011 low at 0.9446 followed by the 0.9400 level, its psycho level. Below there if seen will pave the way for more weakness towards the 0.9300 level.

GBPUSD: Recovery Attempt Builds Up.

The pair still remains vulnerable to the downside despite its present corrective attempt. For GBP to convince the market it has ended its weakness, a break and hold above the 1.6516 level will have to be established.

This will open the door for more strength towards the 1.6743 level and then the 1.6877 level, its Nov’2009 high. A loss of the latter level will pave the way for further strength towards its bigger resistance at the 1.7039 level, its 2009 higher.

On the other hand, while the 1.6516 level continues to hold as resistance, the risk for the pair is to return below the 1.6145 level, its May 13’2011 low.

Further support lies at its psycho level at 1.6000. A halt is expected at that level to turn the pair back up.