The March Canadian dollar futures at the Chicago Mercantile Exchange last week hit a fresh contract low of .8452. This week, the market has been in a “pause” mode–meaning quieter trading activity after the fresh low was established. This pause is not a bullish technical signal and does suggest that a downside “breakout” from this pause will occur soon. Veteran market watchers know that all markets fluctuate between periods of higher price volatility and periods of lower price volatility. This week’s pause in the March Canadian dollar futures (meaning lower volatility) does portend some higher price volatility on the horizon.
Given that the March Canadian dollar has been in an accelerating downtrend from the August high of .9111, technical odds would suggest that any upcoming higher price volatility would be a move to the downside, including a bearish downside “breakout” from the present pause area on the daily bar chart.
On the downside, technical resistance for the March Canadian dollar is located at the contract low of .8452 and then at .8400. On the upside, technical resistance is seen at .8500 and then at the .8550 area.
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