The USD/CAD initially tried to rally during the day on Monday, as one would expect. However, somewhere near the 1.34 level we found enough resistance to turn the market back around and form a bit of a shooting star. This coincided with oil markets trying to rally somewhere near the $40 handle, and with that it looks as if we are ready to have a bit of a pullback at this point.
Nonetheless, I still believe that the US dollar is stronger than the Canadian dollar, and the shooting star only signifies that we are going to pull back and look for support below. Once we find a supportive candle, I am more than willing to step into this market and start buying. On the other hand, we could break above the top of the shooting star, and that would be bullish as well.
Support Below
I see several areas where the buyers could get involved, and as you can see on the chart I have marked the 1.32 handle. That area is an area that has caused a bit of support recently, and with that I feel it’s only a matter of time before the buyers get involved. Keep in mind that the US dollar is considered to be a safety currency and at this point in time safety is something that a lot of investors will be looking for.
If we can get above the 1.3450 level, at that point in time I feel that the market will reach towards the 1.35 handle. Above there, the market should then continue to go much higher and it becomes more or less a “buy-and-hold” market. Selling isn’t even a thought, at least not until we break down below the supportive range that I have marked on the chart that extends from the 1.30 level down to the 1.28 level again. Because of that, I am only looking for value to start buying.
