I decided to look at the US dollar vs the Canadian dollar as I am going to be converting some cash for a trip in the spring and thought I might apply some good old chart analysis to see if I can time the conversion to my advantage.
This is the historical chart for the last 5 years for a general overview of the price action.
The overall trend has been up, obviously, with periods of congestion and dips with this year having the most pronounced. The last three years have seen a spike going into January/February. There aren't any particular gaps or huge moves, it is a currency pairing after all.
Zooming in on the last year and a half and the more important recent months demonstrate a particular pattern that I usually like to watch. The pennant. Typically it is a continuation pattern; if the preceding activity was downward and the pennant forms, it often resolves downward near the apex. The reverse is true for uptrending activity.
The horizontal line is a resistance established September and November last year and reaffirmed March of this year at $1.34.
Zooming in yet again shows how the initial tentative resistance lines were established and changed until the final top resistance held. In the first pennant pattern, the bottom line forms a mostly stable support as it is approached 5 times without breaking until mid August. At this point it becomes a line of resistance. Currently the first resistance line is holding again.
Due to this being timing for buying US dollars, I would plan on just buying the dips but will wait to see if the price breaks down particularly as the bid/ask spread on this is near 3.8 cents and will likely preclude being able to do any serious active trading so I'll just have to cost average my way into this exchange.
These charts are based on October 10th closing and it is the 13th today. The pattern is still holding but it is winding up and ready to snap.
