Comment: Textbook stuff as we move down towards our measured target which remains at parity. The corrective bounce that started at 1.0785 in the first week of June saw record futures volume, six times the norm for 1980-2000, suggesting heavy speculative US activity. The move was capped by Fibonacci retracement in the middle of a wide Ichimoku ‘cloud’ at 1.1725 and now we are tumbling back down to trendline support. Though not quite at May’s extreme, bearish momentum is close to its strongest ever so a decisive break lower looks imminent. If all currencies start pulling in the same direction, forcing generalised US dollar weakness, then allow for an overshoot to C$0.9200. Note that since floating the strongest ever for the loonie against the greenback was 2008’s 0.9059.
Strategy: Sell at 1.1000, adding to 1.1350; stop above 1.1450. Add to shorts on a weekly close below 1.0885 and again on a sustained break below 1.0785 for levels as above.
