USD/CAD Cracks Above 1.45 Handle - 18 January 2016

The USD/CAD pair broke higher during the course of the day on Friday, finally cracking above the 1.45 handle. That’s a very bullish sign obviously, as it is a large, round, psychologically significant number, and we have seen the oil markets fall. After all, as long as the oil markets fall, I feel that the Canadian dollar will continue to come apart.

Currency traders typically use the Canadian dollar as a proxy for crude oil, and as a result this market tends to be the exact inverse of what’s going on in the WTI Crude Oil market. We did manage to break below the $30 handle during the course of the day, and that of course is very bearish and it coincides nicely with a break above the 1.45 handle. At this point in time, I believe that this pair is going to continue to go much higher, and that the buyers are going to become aggressive every time we pullback.

Buying the Dips

I think at this point in time you have to be a buyer of dips as we go forward considering that the trend is so strong. It wasn’t that long ago that I was wondering whether or not we can break above the 1.30 level, and we haven’t looked back since. Because of this, I feel that this is a long-term trend that should continue to go higher, especially considering that the US dollar is considered to be a “safety currency” as well, and of course you have seen all of the stock markets around the world take a real beating.

It is not until oil markets can find some stability that this pair will fall significantly, and as a result I feel that every time this market pulls back people will look at it as value in the US dollar and start buying. Currently, I feel that the 1.40 level is essentially the “floor” in this market.

USDCAD

Christopher Lewis

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.