The Canadian Dollar reversed its direction today, gaining ground once again on the US Greenback. The reversal comes at the 0.9860 level, the lows of August and the top of a descending channel that the pair has been respecting since June. Price opened up yesterday at this level and proceeded to fall and break the previous days low, closing the day at 0.9790. Support below is also strong with the Monthly S1 and Weekly Pivot only separated by only 26 pips at 0.9773 & 0.9757 respectively. The most probable scenario is that we see the USD/CAD fall to at least 0.9745 before testing the bottom of the channel and the 12 month low at 0.9632 that was set 2 weeks ago. A double bottom at the 12 month low is highly possible, but if the level is breached there is a technical vacuum all the way down to the 2007 lows at 0.9056. With the US attempting to drive the dollar lower to boost the economy and spur exports, there is a high probability that this could happen rather quickly. If the fundamentals change and we see investors flock back to the so called 'safe haven' status of the greenback we might see a surge in the USD and push this pair higher. If the 0.9880 is broken then the descending channel will also be broken and higher prices are likely. Look for resistance at 0.9880 with the Monthly Pivot at 0.99287.
Happy Trading!