U.S. Dollar May Extend Gains to C$1.0865 on Chart, Goldman Says

By Ron Harui

July 29 (Bloomberg) -- The U.S. dollar may extend gains to C$1.0865 against the Canadian dollar should it close above so- called resistance at C$1.0340, said Kevin Edgeley, a technical analyst at Goldman Sachs Group Inc. in London.

Resistance at C$1.0340 is the U.S. currency's previous support at the July 25, 2007 low, according to Goldman's chart. Resistance is where sell orders may be clustered. The greenback failed to rise beyond C$1.0340 in April and June, Edgeley wrote in a research note yesterday. In technical analysis, when a support level is breached, that level becomes resistance.

``There is still major resistance at the July 2007 low at C$1.0340 that capped price action in April and June,'' London- based Edgeley wrote. ``A close above would confirm a range break and signal longer-term acceleration toward C$1.0865,'' which represents the August 2007 high, based on Goldman's chart.

The U.S. dollar traded at C$1.0215 as of 2:26 p.m. in Tokyo from C$1.0226 late in New York yesterday, when it reached C$1.0244, the highest since June 17. The currency has gained 1.1 percent versus its Canadian counterpart in the past month.

Goldman's so-called Trend Strength indicator on the daily charts and stochastic oscillators on the weekly and monthly charts also signal the U.S. dollar may strengthen versus Canada's currency, Edgeley wrote.

A stochastic oscillator chart measures the closing price of a security relative to its highs and lows during a particular period to try to predict whether it will rise or fall.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Resistance is where sell orders may be clustered, while support is where there may be buy orders.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net