The USD/CAD pair initially fell during the course of the day on Friday, but found enough support near the 1.08 level to turn things back around and form a hammer. As you know, I have been bullish of this pair for some time now. The fact that we have formed two hammers in a row on the daily charts suggests that the market goes higher as the areas obviously supportive. Also, the oil markets certainly don’t have much in the way of bullishness to support the Canadian dollar, so it makes a lot of sense that this market would continue to go higher. We have seen quite a bit of a significant uptrend recently, so of course it makes sense that the market continues to go higher.
The uptrend line below should continue to be supportive, and as a result is not until we get below there that I could consider selling this pair. With the US Dollar Index break out to the upside recently, I think that it will go to the 84 level, which of course means of the US Dollar should continue to go higher overall. With that, the market against the Canadian dollar should continue in the same direction as well.
The 1.10 level continues to be important.
The 1.10 level of course continues to be important as far as I can see, and it is not until we get above there that I believe that this market exits the consolidation between the euro eight level and the 1.10 level. Once we get above there though, I believe this becomes a “buy-and-hold” type of situation, and that the market will more than likely go to the 1.12 level, and then ultimately the 1.15 level. I recognize that is going to take a significant amount of momentum and force to break out, but I do think that it’s coming sooner or later.
On the other hand, if we did fall enough to break down below the uptrend line, I think this market could very easily drop drastically to level such as the 1.05 level, or even the parity level given enough time. However, that is the least likely of scenarios at this moment in my opinion.
