- The US dollar has rallied yet again against the Canadian dollar during trading on Friday, as we are now threatening to break above the 1.36 level.
- It should be noted that we broke above there just as I wrote this.
- This is a situation where the US dollar will continue to beat up on everything, as we have broken through major resistance in multiple pairs.
Is There an Opportunity to Buy the USD/CAD Today?
Interest rates in America continue to spike, and at the same time we are starting to see serious problems with the Canadian housing market yet again. This has been a bubble looking for a pin for years, and it appears that it may have finally found it. Oil markets have been falling apart, which of course has a negative effect on the Canadian economy, as demand should continue to drop worldwide. This chart has gone a little bit parabolic, but it’s obvious as to which direction we should be trading.
The hardest part right now is going to be sitting on the sidelines and waiting for an opportunity to buy some type of dip. We may or may not get it quickly, and therefore you may have to wait a while. Chasing the trade all the way up here is dangerous to say the least, and if you do choose to do so, you need to do so with a small position. After all, the volatility that we have seen as of late is probably going to get worse before it gets better. I think at this point in time, it’s very likely that this market is going to go screaming higher. This does not mean that it has to happen overnight though, so the most important thing you can do right now is to simply take a breath, and understand that you are looking for value in the US dollar, not necessarily looking to chase it. That’s one of the biggest mistakes that newer traders, as well as older traders, tend to do in these situations. (Full disclosure, I made a ton of money during the Great Financial Crisis in 2007-2008, but gave back far too much doing exactly that.) Caution is the better part of valor, especially as we are heading into a weekend that almost certainly will have some type of headline noise.
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