The USD/CAD pair had a very strong month in January. In fact, breaking above the 1.10 level for me was a relatively significant event. As you can see on the attached monthly chart, this market has certainly broken out and it appears by all means that the 1.15 level will be targeted next. I think this area will more than likely cause some type of significant resistance, but I see nothing between here and there that would keep me from buying this pair. In other words, I think we have about 300 pips or so wiggle room to the upside.
The real fight of course will come at the 1.15 level, and probably higher than that for some time. It appears that there is a thick resistance “zone” above that, probably stringing sell orders all the way to the 1.18 level. It’s not that we can get above there, it’s just that it makes sense to see a pullback from that level.
Know the nature of this pair.
You have to know the nature of this pair in order to trade it. It tends to go sideways for long periods of time, and then suddenly bursts in one direction or another. This was definitely the case back in late 2007, as you can see we were going sideways for several months and then suddenly shot straight up. That’s what this pair likes to do, nothing for long periods of time and then suddenly move. This is why it’s important to be involved in this market now. If not, you will more than likely be on the sidelines for a long period of time, with perhaps the exception of short-term range trading.
You’re going to have to watch the oil markets as per usual, but they don’t exactly see like. Ready to shoot straight up either. Because of that, the Canadian dollar won’t be boosted by oil prices for any significant amount in the short-term as far as I can tell. For the month of February, I believe that we have another positive candle. The real question is whether or not we get above the 1.15 level?
