During the session on Thursday, the USD/CAD pair initially tried to rally during the day, but turned back around in order to form a relatively negative candle. At the end of the day though, I still see this is a market that’s consolidating and also would’ve been heavily influenced by end of the year lack of liquidity. With that, I feel that this market will eventually break out to the upside and in the meantime we are simply trying to find enough buyers to make that happen. After all, the momentum comes and goes as far as trading is concerned, and right before the new year holiday it’s difficult to imagine that the momentum would be fierce.
I think pullbacks offer buying opportunities, and that the 1.35 level below is massively supportive as it should be essentially the “ceiling” in this market. I think any type of supportive candle between here and there is an opportunity to start going long, and if we can break above the 1.40 level, this means that the market should continue to go much higher, and more or less become a “buy-and-hold” type of situation.
And Again, There’s Oil
The oil markets look absolutely horrible, and that puts absolutely no solid footing for the Canadian dollar in the Forex markets. The Canadian dollar is of course traded as a proxy for crude oil, and as those markets look so vulnerable the downward pressure right now, the Canadian dollar is not a currency that people will be buying. Adding to the fact that the US dollar is the most favored currency in the world right now, you have a bit of a perfect scenario in which you simply buy pullbacks as they offer value and the market will eventually take advantage of that, sending this pair higher.
I do not believe that this pair will drop below the 1.34 handle, but if it does that would have me rethinking most of my beliefs when it comes to this marketplace.
