The USD/CAD pair shot straight up during the session on Monday, but the Americans were also away for the President’s Day holiday. Because of this, the pair would be greatly effected as a majority of the volume in this market tends to be North American trading, and the population of the American trading community is much larger than the Canadian one.
With that in mind, one can look at the breakout above the 1.01 level. Granted, it is a particularly interesting move, and on a normal day I would be much more excited about it. However, the real proof will be today, and whether or not the market can do it again. A follow through move is important at this point, and if we get one we could set up nicely for a move to the 1.04 level.
In order to “confirm” this, I am waiting to see if we get a break above the high of the Monday session, which would show an acceleration of the bullish momentum. The market would then have proved itself to me. Most of this is because of the choppy nature of the pair as well, which of course should always be taken into account.
Oil and its input
The oil markets have an important part to play in this market as well, and they cannot be forgotten. Under normal circumstances, this pair will gain as oil falls, and vice versa. The oil markets are essentially stalling at the moment, as they are pressing up against resistance levels in various types of oil.
The next couple of sessions will be important as a result, and to be honest – I am only looking at buying currently. There are far too may minor areas below for us to think that a fall will be a clean move, and as a result I think it will be a tough sell to take. With that in mind, all I can think of at this point is to be long or flat as the markets are only offering easy pips in those directions.