Flags and Opportunities in the Canadian Dollar FXC

Jun 8, 2009: 12:28 PM CST

With the weakness in the US Dollar and strength in crude oil, the Canadian Dollar (and respective ETF “FXC”) have been rallying in a strong impulse up that may be setting up another low-risk opportunity into possible support.  Let’s see it.

“FXC” Canadian Dollar ETF Daily:

Starting with the March lows, we see a distinct positive momentum divergence that carried forth also on the weekly chart (it’s very powerful to have positive momentum divergences on two timeframes).

That preceded the large rally from $77 to the recent $92 high – notice how volume picked up as price rallied higher in March and has been especially strong over the last few weeks.

Price broke resistance at the $85 level and formed a quick bull flag off a new price and momentum high for 2009 (green arrow) which hinted that higher prices were yet to come.

We completed an official bull flag into the recent June highs which has also formed a new momentum high on the 3/10 Oscillator as well – hinting that odds could favor higher prices still yet to come.

In an uptrend, the 20 day EMA should be expected to hold initial support on any test, so this makes the chart attractive from a low-risk standpoint (at $88.50).  More aggressive traders could even place a stop beneath the 50 day EMA at $86 for more protection.

Also, the $87 price high in May could also be expected to hold as support (according to the “Polarity Principle” – old resistance becomes new resistance).

Continue your analysis for additional opportunities and insights into price structure and possibilities that may lie ahead.

Corey Rosenbloom, CMT
Afraid to Trade.com

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3 Comments

3 Responses to “Flags and Opportunities in the Canadian Dollar FXC”

  1. scottw Says:

    Agreed that the 20ema support is most important. But the recent big red volume bars and MACD Histogram bars hitting multi-month lows makes me think this time that bull flag might not be. Maybe a weak bounce (lower high) off the 20ema might be a short signal?

  2. Corey Rosenbloom, CMT Says:

    Agreed – it's never as perfect as we'd like it to be – it's a low-risk opportunity because the target is much larger than the stop, which is quite close if we're so inclined to take the risk.

    Granted, the large volume bars aren't encouraging, but that's why we have to do our own analysis and make our own trading decisions – I'm just here to point out a few ideas and teach a few lessons.

  3. Corey Rosenbloom, CMT Says:

    Agreed – it's never as perfect as we'd like it to be – it's a low-risk opportunity because the target is much larger than the stop, which is quite close if we're so inclined to take the risk.

    Granted, the large volume bars aren't encouraging, but that's why we have to do our own analysis and make our own trading decisions – I'm just here to point out a few ideas and teach a few lessons.