USD/CAD (daily chart) has shown a marked decline after touching and respecting strong resistance around 1.0050, just above parity. This retreat of the past two days follows a bearish divergence indication between price and oscillator (Stochastics), indicating a potential loss of the bullish trend momentum that has been in place since the September 0.9630 low. This decline from key 1.0050 resistance also occurs after price broke out above both a bearish trend line and the important 0.9900 resistance level in the latter half of October. If price is able to stay below 1.0050 resistance and re-break below 0.9900, thereby breaking down the short-term bullish trend that has been in place since the September 0.9630 low, price could decline further towards a potential re-test of the 0.9800 and then 0.9630 levels. To the upside, in the event of a subsequent breakout above the important 1.0050 resistance, price could move towards a further potential resistance objective around the 1.0230 price region.
James Chen, CMT
Chief Technical Strategist
FX Solutions
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