- The USD/CAD has done very little during the training session on Monday, as we are stabilizing near the 1.3250 level.
- By doing so, it is respecting the previous resistance that we had seen in this area, so it does make a certain amount of sense that perhaps a bounce is possible here.
- Furthermore, it will have a lot of influence from the oil market as per usual, as the Canadian dollar is so highly leveraged to that commodity.
Looking at this chart, if we were to break down below the 1.32 level, then it opens the possibility of a move down to the 1.30 level underneath, and then eventually the 1.28 level. Granted, this is a market that I think will continue to see a lot of noisy behavior, so just about anything is possible, especially as there are plenty of concerns in the oil market that could throw that thing around itself. It is very likely that we eventually see some type of resolution to whether there is enough demand or supply in the oil market, and that could be what leads to where we go next in this pair.
Volatile Choppiness Ahead
Keep in mind that a lot of people have been betting against the Federal Reserve tightening monetary policy much further, and while that’s been going on the Federal Reserve governors have been out speaking against this idea, explicitly saying that the market “got way ahead of itself.” Because of this, it’s very possible that we could see a situation where the market is going to recover in favor of the US dollar quite rapidly at the next sign of inflation. I think at this point, the market has gotten ahead of itself so does make a certain amount of sense that this area could be nice support, so I’ll be looking for support of candlestick to turn around and start buying again.
The 1.35 level was the next line from the head and shoulders that we formed previously, so at this point I think that makes sense as resistance. I think we will continue to see a lot of choppy volatility in this market, but that’s not really that big of a surprise in this pair as it does tend to be very messy.
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