The USD/CAD pair went back and forth during the session on Friday, initially rising, and then falling. However, it stayed in a relatively tight range during the balance of the session. As a result of this, we have formed a somewhat hammer like candle. Nonetheless, I don't like this hammer candle simply because the market has been so choppy recently.
A little while back, I had suggested that a daily close below the 1.02 level would be very bearish. Unfortunately, what we've gotten since then is a lot of choppy, and it looks like that will be the modus operandi of this pair going forward. Don't forget though, it is highly correlated to the Light Sweet Crude market out there, which of course is banging into significant resistance. If that market breaks out, this one breaks down. Of course the opposite can happen, and as a result choppiness should abound.
FMOC Statement
I believe that a lot of the Forex markets will be very quiet over the course of the next day or two, as the world awaits the statement out of the Federal Market Open Committee on Wednesday. There is a lot of confusion in the Forex markets, mainly surrounding what the Federal Reserve is going to do about so-called "tapering off" of quantitative easing, which of course the markets have become very accustomed to. Because of this, anything with the symbol “USD” attached to it is going to be a bit jittery. Is because of this that I think this pair is especially vulnerable to choppiness, as the two economies are so intertwined.
That being said, I do think that the market is biased to the downside. I think at this rate, is very possible that we will eventually hit parity, but quite frankly I don't have the tolerance for this kind of choppiness. Unless you are trading this market from a very short-term perspective, maybe only aiming for something like 15 pips at a time, this is going to be very difficult to trade, at least until after that meeting comes out and gives us some clear direction.
