The US dollar fluctuated against the Canadian dollar on Friday as we continue to simply grind sideways, hanging about in the quietest time of the year. The majority of the big figure traders out there are more focused on holiday than anything else right now, so the fact that we went nowhere should not be a huge surprise, as we are waiting to see some type of decisive factor to send this market in one direction or another.
The uptrend line that I have drawn still is intact, and it coincides quite nicely with the 1.25 level, which is a large, round, psychologically significant figure. If we can break above the 1.26 handle, then it is possible that the market could continue to go higher, perhaps reaching towards the 1.28 level. The 1.28 level had offered quite a bit of resistance in the past where we sold off from there, but when you look at the chart you can see how much we have rallied from the absolute bottom at the 1.20 handle.
The 1.20 handle is worth paying attention to due to the fact that it is a major bottom on the monthly charts, and an area where we have seen a lot of action in the past. With that in mind, the question now is whether or not the 1.20 level has offered a hard floor in the market, or have we just simply balanced in order to build up enough momentum to break down through it down the road? You also need to keep in mind that we are currently stuck between the 200-day EMA and the 50-day EMA indicators, simply squeezing the entire market. As we seem a bit stuck at the moment, it does make a sense that eventually we will get some type of indication as to where we are going in the form of an impulsive candlestick. If we get that impulsive candlestick breaking out of the range, then it allows for the possibility of a bigger trade. Until then, we are essentially sitting on the sidelines waiting for some type of signal. This is a very quiet market, and quiet markets do not stay that way forever, so it is most certainly worth keeping that in the back of your head.
