USD/CAD Daily Outlook June 8, 2012

Christopher Lewis

The USD/CAD pair is one of my favorites at the moment. This is simply because the oil markets are falling apart, and this gives me a clean way to play that market without all of the heavy margin associated with the futures contract. This allows me to take advantage of the move, while giving me the granularity of Forex.

The Canadian dollar is heavily dependent on oil and the United States. The Canadians send over 80% of their exports to the US, so in a roundabout way, this pair works in an opposite manner of what many people would think. One example is that the pair will gain on a poor Non-Farm Payroll number often. The main reason being the lack of a market that unemployment in the US causes the Canadians. With this in mind, the worse things get in America, the lower oil goes, and this higher this pair goes.

Hammer time.


The hammer from the session on Thursday is formed just at the 38.2% Fibonacci level, and looks like we are going to continue the uptrend this pair has found itself in lately. The 1.05 level will be targeted sooner or later, and I think that a new high would signal that this pair is ready to climb to much higher levels.

The hammer has a nice long wick, and this makes it even more impressive. This means that the bears had pushed the pair a great deal lower, and have been thwarted. This means that a lot of effort has been turned away. This allows the bulls to feel that the majority of the market is still with them, and as a result it is obvious that it is going to be much easier to buy than sell the market.

USDCAD Daily 6812

The pair also has a lot of support all the way down to the parity level. The pair has support at each handle, and supportive action at any of them looks like a decent place to buy. This of course would change if the market closed on a daily chart below parity, as that would show a massive swing in momentum. Until then I am buying only.

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.

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