The USD/CAD pair initially fell during the session on Tuesday, but found enough support below the 1.11 level to turn things back around and form a hammer. They hammer of course is bullish, and in the end I believe that this market is going to go higher anyway, but this gives me just another reason to believe so. At the end of the day though, we are still well within the consolidation area, which of course has resistance of the 1.12 level.
It is not until we break above the 1.12 level though that I feel confident holding a longer-term position. In the meantime though, short-term traders will more than likely find a reason to get bullish of this market, as it should ultimately take off to the upside. After all, the US dollar should continue to be bolstered by tightening of monetary policy, and with that we believe that this market should continue to show bullish strength, and eventually the 1.15 level.
In order to trade this pair, you must be patient.
In order to trade this pair, you have to be fairly patient. After all, the market quite often will go sideways for great length of time before eventually breaking out or breaking down. You see sudden impulsive moves after long periods of sideways grinding, so if you do get involved in this market you simply have to be patient and let it do its thing first. Once it finally gets broken out though, it does move very rapidly.
Pay attention to the oil markets, as they are looking a little bit on the weak side which should work against the Canadian dollar in the longer term. However, I believe that the oil markets could be a little bit more bullish given enough time, and that of course could at a little bit of strength to the Canadian dollar. However it should be noted that strong oil prices have not help the Canadian dollar recently, which is a bit of an anomaly and tells me that this market is focusing more on what’s going on at the Federal Reserve than anything else.