The USD/CAD pair fell significantly during the course of the session on Tuesday, dipping well below the 1.30 handle. I believe that there is a significantly supportive zone between the 1.30 level on the top, and the 1.28 level on the bottom. Because of this, I believe that the balance that happened towards the end of the day could have been anticipated. On top of that, the impulsive candle during the session on Monday certainly lends credence to the idea that the buyers are starting to show up again. With the market bouncing significantly at the end of the day on Tuesday, I feel that this pair is now going to continue to go much higher.
The top of the candle gives way for the buyers to take control, pushing all the way to the 1.33 level given enough time. I don’t think it is going to be an easy move, but ultimately I do think that the buyers will take control again. After all, we have had a massively supportive candle and previously had a massively sharp selloff. Typically, those moves can’t go on for very long.
Oil markets
Oil markets of course have a great influence on the Canadian dollar, and they of course look as if they are ready to consolidate. That type of consolidation is fairly good for this pair, as it takes a lot of the external pressure off of the market in general. I think that this pair cannot be sold until we break down below the support “zone”, which as stated earlier I see at the 1.28 handle. Below there, things changed completely, but I think between now and then, anytime we have a supportive candle it is worth buying. Ultimately, I think that the uptrend continues as this area should offer quite a bit of support based upon the fact that it had previously been so resistive on both short and long-term charts.
