The December Canadian Dollar is trading a little better this morning despite the news that the European bank reconstruction pact has apparently hit a snag. With the market headline driven at this time, traders are being a little more careful about putting on major positions at current price levels.
Monday’s closing price reversal top should’ve put some downside pressure on the Canadian Dollar, but apparently short-traders didn’t see it that way. It now looks as if long traders lightened up their positions based on concerns about the Euro Zone pact getting completed by the October 23 deadline.
Daily December Canadian Dollar
The closing price reversal top formed at .9941 was confirmed on Tuesday, but the lack of follow-through to the downside makes it look like the shorts are backing away from refreshing their positions, or there is a large bid out there holding the market up. Usually this type of pattern leads to a 2 to 3 day break equal to 50% of the previous rally. Based on the short-term range of .9367 to .9941, the potential downside target is .9654. In addition, uptrending Gann angle support at .9607 may be another downside target.
On the upside, Gann angle resistance at .9881 appears to be keeping a lid on any noticeable appreciation. In addition, the market is now trading on the bearish side of an uptrending Gann angle at .9847 after holding above this angle for nine consecutive days. Regaining this angle will be a sign of strength. Additionally, a trade through .9941 could trigger an acceleration to the upside.
