- The US dollar has rallied significantly during the trading session on Wednesday against the Canadian dollar, as we have seen the 1.3650 level offer support.
- Quite frankly, we recently had broken out in this pair to the upside, pullback, and now it looks like we are seeing the retest and subsequent bounce that a lot of people look for.
Keep in mind that the Canadian economy is not the US economy, so despite the fact that the Americans are doing so well, you cannot extrapolate that into Canada for anything more than potential exports. The Canadian housing market is a bit of a mess, all you have to do is ask somebody in Toronto or Vancouver how that’s going for them, and you will hear and earful.
The size of this candlestick is very strong, and that does suggest that we have further to go to the upside, perhaps reaching the highs again. Above there, we have the 1.39 level which is a target that I think makes a lot of sense considering that it offered significant resistance previously. While crude oil does have a certain amount of influence on the Canadian dollar, it is somewhat muted against the US dollar, mainly due to the fact that the Americans produce a much crude oil themselves these days.
Support Underneath
I see various support levels underneath, not the least of which would be the 1.3650 level that we bounce from, but I think even more importantly, you can take a look at the 1.3600 level as the short-term “floor in the market”, as the 50-Day EMA has reached that level. Keep in mind this is an indicator that a lot of people pay close attention to, so I think it is a situation where you are looking for value plays, as long as we could stay above that level. If we were to break down below there, then it could change things but right now it looks like the US dollar is going to continue to strengthen against almost everything, and the Canadian dollar course won’t be any different.
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