The USD/CAD pair fell during the session on Thursday, slicing through the 1.10 level. Although this is a fairly significant round number, I believe that it is simply the beginning of support, and that it runs down to the 1.09 handle. I think that supportive action in this area is exactly what we need to see in order to start buying this market again. The market has been consolidating for some time now, going back to the middle of January. However, this is not uncommon for the USD/CAD pair, as it often will go sideways for great length of time before making a sudden and an impulsive move either higher or lower. I believe this is because the two economies are so interconnected, that one will quite often influence the other, essentially negating the news.
With nonfarm payroll being today, I would expect this to be one of the more interesting pair to trade. This is especially true because the Canadians will be releasing their employment numbers as well, and as a result this could be an extremely volatile market. I do believe that the 1.09 level should continue to be somewhat supportive though, and as a result I am more interested in going long been short, based upon short-term supportive candles.
Several targets.
A supportive candle somewhere in this general vicinity should have this market heading towards the 1.12 level it’s going to take a while, mainly because there’s so much in the way of resistance between here and there. However, if we can get above that level, the 1.15 level is more than likely where the market should end up adding. However, we do have to worry about the downside, as no matter what my bias is, this market certainly can fall.
If we close below the 1.09 level on a daily chart, I believe at this point in time it opened up the door to the 1.06 level. I would expect support to start showing up right around 1.07, as there is a bit of a “squishy zone” between there and the aforementioned 1.06 handle.
