The USD/CAD reaches it's 38.2% retracement from the highs reached earlier today, but the pressure is still on the pair. I still favour the idea that the pair will fall further, but the sentiment is tentative given the fact that this pair is trading at an extreme low. It is still along way from the record low of 95.5 seen in November of 2007, but the risk of the BoC intervening to weaken their currency continues to loom.
Last month the pair failed to validate a reverse head and shoulder's pattern that would have suggested a low was in place just below par, and in recent weeks technical indicators have begun to favour a continuation of the downtrend. This could mean that the pair could sink well below par, some analysts targeting 0.9750.
I am going to play the pair to the short side with a very tight stop loss. Click on the Trading Journal link at te top of this page to get an insider's look in to my entry and target levels. It's a sensitive trade, I will be watching it closely.
Aaron Reid
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