The USD/CAD pair tried to rally during the course of the session on Monday, but as you can see struggled at the 1.25 handle. That area has been a bit of a magnet for price, and as a result it’s not a big surprise to see the market head back there. Ultimately though, I think that we are consolidating over a larger area, so quite frankly I like the idea of buying here. I would prefer to see the market go above the 1.25 handle, for a short-term buying opportunity up to the 1.27 handle.
Looking at this market, even if we break down from here I believe that there is plenty of support all the way down to the 1.20 handle, and extending below there to the 1.18 handle. Ultimately, the market should have plenty of buyers based upon not only the fact that the Federal Reserve continues to look like it’s ready to tighten, the fact that the Bank of Canada recently cut interest rates.
Continued uptrend with trouble above
This market should continue to go higher based upon the industry differential shrinking, and the fact that the oil markets have been so soft. Ultimately, I believe that the market should go much higher, probably testing the 1.30 level above. That was where the market stopped during the financial crisis, and tested the area for resistance several times. Ultimately, I think that this market could break above there but it’s going to take a lot of momentum building between now and then. It’s going to be a significant fight, ultimately offering massive rewards if we get above there though.
I believe the pullbacks will continue to be valuable for the longer-term trader, because there is just so much upward pressure. Again though, the 1.30 level will be the real fight, but if we can get above there it could be a longer-term buy-and-hold situation. Dips at this point time continue to be buying opportunities to me.