- The USD/CAD has rallied a bit during the trading session on Friday, as it looks like we are going to threaten the 1.34 level.
- If we can break above her, then it’s possible that the 50-Day EMA comes into the picture, as it offers a little bit of resistance.
- If we break above the top of the 50-Day EMA, then it’s likely that the market goes looking to the 1.36 level.
That is the beginning of the head and shoulders pattern, which essentially makes it the “neckline.” That’s an area that was previous support, so therefore it should in theory be resistance. We can break above there, then it is likely that the market could go looking to the 1.38 handle. Keep in mind that the West Texas Intermediate Crude Oil market has started to fall apart, and that of course works against the valley of the Canadian dollar as it is a proxy for crude oil and the Forex markets.
Oil Looks Weak
The 1.32 level underneath is an area that offered support, as it had previously been resistant. The 200-Day EMA sits just below there, so it could offer a significant amount of support as well. Nonetheless, this is a market that I think continues to see volatility, but it looks like this pullback is going to be an offer for cheaper US dollars from what I can see. It’s not until we break below the 200-Day EMA that we could drop down to the 1.28 level.
Ultimately, this is a market that I think will move back and forth not only with interest rates but also with the crude oil markets. It is worth noting the cruel markets are getting crushed on the idea that demand is falling, as the global economy is going to slow down. By doing so, it’s likely that we could see an attempt to get to the upside, but nothing is going to be easy in this market, therefore I think the move to the upside, even if it does come, will probably be something that you have to grit your teeth and bear the chop. I don’t think that we are going to see an explosive move one way or the other unless of course the crude oil market suddenly falls apart. I think oil looks weak, but not like it’s going to implode.
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