During the day on Friday, we broke down during the course of the session, as the Canadian dollar continues to sell off drastically. Keep in mind that the oil markets continue to work against the value of the Canadian dollar, as it is a bit of a proxy for the crude oil markets. Having said that, currency traders continue to punish the Canadian dollar, and as a result I think that this market will continue to go much lower.
This is a bit of a perfect scenario to trade the oil markets via currencies, simply because the Japanese import 100% of their petroleum, so this is much purer to the plight of oil as the USD/CAD pair ultimately has to deal with the fact that not only did the Canadians produce crude oil, but the Americans do as well now. In a sense, the US dollar is becoming a bit of a petrocurrency.
The fact that we broke down below the bottom of the hammer from Thursday during the Friday session tells me that this market is going to continue much lower. I think that rallies at this point in time will represent value in the Japanese yen, and that we should eventually hit the 80 handle given enough time. I think that the 85 level above should continue to be resistance, and essentially serve as the “ceiling” in this particular currency pair. At this point in time, I don’t see a scenario where this market rallies, at least not anytime soon.
It is not until well find some type of floor that we will see this market rally, and the oil markets right now look very susceptible to even further down trend pressure. Ultimately, I think that this market has much further to go, and I will continue to sell time and time again. I even look towards short-term charts in order to find exhaustive candles.