miroslava.micunkova's picture

USDCAD is checking out the Eve’s round bottom

USDCAD underwent a multi-year decline from the early 2002 till late 2007 before bottoming out at .9061. Recovery from there reached 1.3063 in March 2009 before submitting into a further weakness.

The following decline appeared on a much slower pace reaching its lowest point at .9408 in July 2011. Both of the dips together, the V-shaped one and the more round one, constitute a 7-year long bullish double bottom formation referred to as Adam & Eve, suggesting a major trend change.

The double bottom is confirmed only after the price closes above the peak between the two dips, in the USDCAD case above the 1.3063 March 2009 high. This is expected to happen later in the year as the rally from the .9408 (2011 low) is already at its late stage. The bullish long candle which developed in January this year is however already a strong indication of a successful completion.

Our initial target upon a decisive break is seen at 1.3646 (161.8% projection of .9408-1.1277 from 1.0622). Our long term targets (6 month +) point at 1.5460 and 1.6971.

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