Strategy05 March 2014

USD/CAD – maintain positive bias as correction appears to have already terminated at 1.0912.

Looking for 1.1189/1.1244 resistance to be re-tested

Our initial upside target of 1.1187/1.1244 has been met, this is the 1991 low and the 50% retracement of the move down from 2009-2011. The setback that we have seen from here is viewed as an ‘a-b- c’ correction which terminated at 1.0912. We believe the USD/CAD chart is well placed to resume its bull move and will do so once the 1.1244 resistance is taken out.

We maintain that the USD/CAD chart is bullish longer term. It has completed a large base between 1.0660 and 0.9403, this base took almost 3 years to complete, and the pattern broke higher earlier this year. It offers an upside measured target to 1.19 longer term. Given that the base took 3 years to complete, this target is achievable in approximately half of that time, i.e. by Q2 2015. We should therefore see the Canadian Dollar come under pressure throughout much of this year.

Below 1.0850 would trigger a deeper sell off to the previous high charted in 2011 at 1.0660, however key support remains the 1.0418 2012-2014 uptrend – while above here a longer term upside bias is maintained.

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