The Canadian dollar may strengthen to 98 cents against its U.S. peer after forming a gravestone Doji chart formation Aug. 10, according to Toronto-Dominion Bank, which cited technical analysis.
A gravestone Doji is a candlestick formation created when the opening and closing prices are equal and occur at the low of the day, indicating a balance of supply and demand. Canada’s dollar broke through support levels at 99.5 cents per U.S. dollar, which has now become resistance for the pair, Shaun Osborne and Greg Moore, currency strategists at TD Securities in Toronto, wrote in a note to clients today.
“The lack of upside traction Friday leaves a very obvious black mark against USD/CAD and implies that the recent downtrend has further to run,” Osborne and Moore wrote. “The bearish implications of Friday’s price signal are clear from its name.”
The Canadian dollar, nicknamed the loonie, extended a fifth straight weekly advance today, the longest streak since October 2010. The loonie appreciated to the highest level since May against its American counterpart before trading at 99.24 cents per U.S. dollar at 9 a.m. in Toronto.
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.