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Canadian Dollar Declines Off Short and Long-Term Resistance


March Canadian Dollar futures (6C) fell on February 26 after reaching trendline resistance and a short-term horizontal resistance area. The decline is short-term bearish, and may prompt a longer-term wave lower.

There are two dominant trendlines in play on Canadian dollar futures. The first covers the initial steady decline between July and November. The other descending trendline--the one recently touched--caps the more aggressive decline since December (call it the "aggressive trendline").

Figure 1. Canadian Dollar Futures - 4-Hour Chart

candian dollar-1.jpg

On the 4-hour chart the aggressive trendline intersects near 0.8050. This aligns with a horizontal resistance area—since the start of February the price has tried multiple times to climb above 0.81, but four times has faltered between 0.8070 and 0.8090.

February has also formed short-term support between 0.7871 and 0.7895, creating a range within this longer-term downtrend.

With the recent decline off resistance, the target is just above short-term support, near 0.7900.

With the trend down, the price may break that support area. If that occurs, the target is 0.7675 (based on the approximate height of the range, subtracted from the breakout price).

A rally above 0.81 signals short-term bullishness, with a price target near 0.8275. The longer-term trend will still be down though.

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