By: Christopher Lewis
USD/CAD is a tough pair to trade at times. The recent past has been pretty easy for a lot of traders as it has been in such a well defined range. While many traders do not like trading markets that aren’t trending, the truth is a market like this one can be very profitable if you are willing to trade it back and forth.
However, on Tuesday we saw a bit of a change in the attitude of the pair. The market managed to push well above the parity level, and this was the “top” of the range. Also, the 200 day EMA is now below the current price and this also suggests that we are perhaps trying to reverse and breakout of the consolidation.
The 1.01 level is the “end” of the resistance that has been keeping this pair down. The oil markets have been grinding lower over the last few weeks, and now we are starting to see this pair react in accordance.
Almost broken out.
The pair isn’t’ quite where I need it to be yet in order to buy it. Granted, I fully believe that the real risk is to the upside currently, but I see the 1.01 level as an area that could give me problems on any long position. Also, there are many risk sensitive pairs that are on the precipice of making “risk off” moves, and as a result I think this pair will move higher as many others are making their moves. This is almost like a “binary event” in the sense that it is going to totally be a “risk on” or “risk off” market. The action will have little to do with the United States or Canada on the whole is my suspicion.
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With this being said, I feel that the market is about to make a move higher. However, the market must break the 1.01 handle on a daily close in order for me to consider buying. If it does, I think 1.03, 1.04, and 1.05 are all possible targets. As for selling, I need to see a weak candle at these levels to consider it at this point.