The USD/CAD pair fell slightly during the session on Thursday, showing signs of weakness. However, by the end of the day it appears that we really didn’t go too much farther to the downside, and because of this I believe that there is still an underlying bid to the US dollar against the Canadian dollar. This of course makes sense as there is a general feeling of concern economically, and the Federal Reserve did of course cut back on quantitative easing slightly just two sessions ago.
Looking at this chart, I see quite a bit of support all the way down to the 1.10 level, which I see as the “floor” in the market right now. That floor should continue to keep markets afloat, and I do believe that eventually we will try to hit the 1.15 level. With that, I am a buyer on dips going forward, as the market seems to be ready to go much higher.
Normal action in this market.
Normal action in this market dictates that a go sideways for long periods of time, and then straight up or down. This hasn’t been any different lately, and as a result it appears that this is just the normal behavior repeating itself. With that, it is possible that we go sideways for a little bit and get used to the idea of being above the 1.10 level. However, consolidation normally means continuation, so the move the 1.15 makes sense.
On the monthly charts, breaking above the 1.10 level did in fact look impressive, but the 1.15 level is even more impressive as far as resistance is concerned, so I feel that the market will certainly struggle in that general vicinity. Quite frankly, if we get above that area cleanly, this pair could skyrocket. I’m not looking to see that happening anytime soon.
On the contrary, I believe that although this market will be positive, it’s probably best traded more from a short-term sense in the fact that buying dips as they show support for quick gains should continue to be the way to go as we march higher.
