FX.co ★ USD/CAD technical analysis for January 3, 2011

Support levels: 0.9930, 0.9820, 0.9750
Resistance levels: 1.0212, 1.0290, 1.0380
On a 4-hour graph the USD/CAD has successfully broken through the support level near 0.9980-1.0000. At the moment the viewpoint to the pair is bearish.
Most of 2010 this level has demonstrated substantial demand since Canadian companies tend to buy dollars for lower price. However, low trading volume caused exaggerated fluctuations of this currency pair last week. Therefore the bears have easily broken the 0.9980 level. As mentioned before, the breakout of support level at 0.99880 will allow this pair to reach 0.9930 with 0.9750 as the next target.
Nevertheless, if a reversal takes place and the USD/CAD breaks the 1.0212 resistance level, this will lead to upside motion with the target to 1.0290. Further breakout of 1.0380 will denote the end of a rollback from 1.0680 and that further advance should be expected.
In the midterm the currency pair will probably remain within the limits of its wide range between 1.0000 and 1.0750-1.0850. Nonetheless, in case the reversal takes place, then the breakout of 1.0680 will confirm that the consolidation ended and that the downtrend with 1.3063 is broken through. In this case it is expected that the USD/CAD will move upside to the Fibonacci correction level 38.2 from 1.3063 to 0.9929 at 1.1126 with the next target to the Fibonacci correction level 61.8 at 1.1866.