The USD/CAD pair spent the majority of the session on Monday following, but bounced hard enough to form a hammer. This hammer is just below the 1.06 handle, so therefore it has the look of a market that is trying to find the bottom of the recent consolidation area. Because of this, I think that this market is ready to continue going higher, and we may simply see this market grind sideways for the next week or two. It seems very comfortable in this general vicinity, so why not?
I’m actually very bullish this pair. However, I recognize that this time of year you should probably take your profits relatively quick, and therefore this is more or less going to be like the rest of the Forex market: a market for scalpers. That being said, I still believe that the barrier at the 1.07 level will be overcome given enough time, and once that happens we could head to the 1.10 level.
Lower liquidity could keep this market relatively quiet.
The fact that we have lower liquidity of the moment means of this market could be relatively quiet for the next two weeks. With that in mind, I am buying this market every time it pulls back and shows any signs of support like it has during the session on Monday, and aiming for small gains such as 50 or 75 pips. We could possibly get larger gains than that, but until we get the daily close above the 1.07 handle, I don’t think will really going to see a massive move higher.
As usual, keep an eye on the oil markets, as they can have an effect on the Canadian dollar. Again though, I don’t see those markets taking off in one direction or the other in the next two weeks either, as I believe traders are starting to take their holiday vacations. With that being the case, they certainly aren’t concerned about the Forex or commodity markets, and then could keep this pair on the back burner for at least two weeks, possibly even three.
