FX.co ★ USD/CAD Intraday Technical Analysis and Trading Recommendations for December 17, 2012

In the previous articles, we suggested that the potential downside movement remains valid as long as the pair is trading below 1.0040 and below 1.0000 area, the psychological resistance.
Price zone 0.9900 - 0.9860 (Important Fibonacci Levels) provided strong support expressing strong bullish price action, which is manifest in the giant bullish engulfing daily candlestick.
The USD/CAD pair expressed strong bearish reaction towards 1.0020 - 1.0050, failing to consolidate above 1.0040. This indicated a strong bearish move towards 0.9995; then 0.9945 took place which actually occurred when Intraday Support around 0.9980 was broken down.
The Daily chart showed a narrow consolidation range 0.9905 -0.9955, located few pips above 0.9890 (50% Fibonacci Level) which was broken-down last week. That is why retesting of 0.9905 will be considered as a valid SELL entry with SL as 4H closure above 0.9930.
Lack of bearish follow up that is required after a significant breakdown of 0.9855 (61.8% Fibonacci Level) indicated a bullish retracement had taken place before further continuation of the bearish movement.
Price Zone 0.9890 - 0.9910 should be watched at retesting as it will probably provide a valid SELL entry with SL as 4H closure above 0.9930.

Support: 0.9855, 0.9830, 0.9805, and 0.9760.
Resistance: 0.9900, 0.9950, 1.0040, and 1.0080.