USD/CAD Bear Flag Pattern within Strong Bearish Trend
James Chen October 12, 2012 8:17 PM
<p>Price action on USD/CAD (daily chart) as of October 12, 2012, has formed a bearish flag pattern within the context of a strong bearish trend […]</p>
Price action on USD/CAD (daily chart) as of October 12, 2012, has formed a bearish flag pattern within the context of a strong bearish trend that has been in place since the early June high at 1.0445.
This flag consolidation formation occurs after price broke down below a bearish rising wedge pattern last week. That rising wedge can be seen as a bear market rally. If the price is able to stay or return below the 0.9800 price region, a breakdown below the lower border of the inverted flag could trigger enough downside momentum to move towards a re-test of the 0.9630 low hit in mid-September.
Any further break to the downside below that level has the bearish trend potential to move towards the key 0.9400 support level, which not only represents the three-year, eight-month low hit in July of 2011, but also the 161.8% Fibonacci extension of the last major bullish run from late April to early June.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.