Check out my update for the USDCAD 4-hour chart posted above. Like I mentioned yesterday, the pair has been sliding down lately but it appears to have met an obstacle before heading any lower – that’s the support level around 1.0425 to 1.0450. The USDCAD has failed in its last three attempts to breach this level and we’ll see whether the pair’s downward momentum is strong enough to break 1.0430 this time. However, the stochastics are already in the oversold area, indicating that upward price action could take place soon. If the pair bounces from support at 1.0430, it could climb all the way up and retest the resistance around 1.0730 to 1.0750.
After several days of decline, the EURUSD pair appears to be forming a rounding bottom pattern. However, given light volatility ahead of the New Year, it is unlikely for it to move past the formation’s neckline just above 1.4400. Chances are it would just trade below the mentioned critical level for the rest of 2009. In any case, it could encounter some resistance at 1.4500 if and when it breaks the neckline.
Similar to the EURUSD, the Cable happens to be on a consolidation mode after falling for several days. A double bottom pattern can be seen in its 1-hour chart above. However, given the lack of economic flows this week, the probability of it breaking out from the formation is minimal. I see it just trading within the formation’s resistance and support for the rest of the year. But if it breaks out, its minimum upside target would be at 1.6125.