The USD/CAD pair fell significantly during the session on Tuesday, after initially trying to rally. The area above the 1.1050 level proved to be far too strong, and as a result we ended up selling off. What surprised me was that the market broke down below the 1.10 handle, which was an area that had been very resistive in the recent past. Ultimately, the market appears that it’s still has a significant amount of support just below though, and that support should last all the way down to the 1.0850 level as the clustering between here and there looks rather significant.
That being said, I am waiting to find a significant support candle below, and then will start buying again as I believe that the Canadian dollar will continue to sell off over the longer term. With that being the case, the market is one that I’m staying out of at the moment, but I do recognize that paying attention to this marketplace is crucial, and as a result I will be keeping an eye on it. However, I’m not willing to risk money in this marketplace quite yet.
Nice pullback, could represent value.
The fact that we pullback so strongly suggests to me that there could be value found in the US dollar at this level, and as a result I believe that sooner or later value hunters will come back into the marketplace and push this pair higher. I had first expect to see the 1.12 level targeted, and then possibly the 1.15 level given enough time. It will take a significant amount of time though, so I do not anticipate this happening overnight.
After all, this pair has a long history of grinding sideways in bouncing around in order to make up its own mind. Once it finally get some type of significant momentum in one direction or the other, the market will then make a fairly impulsive move. That impulsive move normally is what makes you all of the money in this pair see you have to be patient.
