The USD/CAD pair had a volatile session on Monday as we initially tried to rally but then turned around to fall significantly below the 1.35 level. This pair of course is highly influenced by of the crude oil markets, which got a significant boost at the open, as it appears that OPEC is getting closer to the production cuts that the market has been banking on. Because of this, the US dollar fell against the Canadian dollar which of course is a bit of a proxy for the oil markets by currency traders. Ultimately, I think that if we can break down below here, the market should then go to the 1.34 handle. Alternately, if we can break above the 1.3550 level, the market will probably go and challenge the 1.36 level above. That is an area that is significant on longer-term charts, and once we broke above there I thought that the market would continue to go higher.
Ultimately, volatility will continue
I believe that no matter what happens, the volatility will continue this market based upon what’s going on in oil and of course the Canadian housing situation will have an effect as well, as it appears to be a little less than stable. I believe that the sellers have made a significant move though, so until we can break above the 1.3550 level, I don’t really see an opportunity to start going long, unless of course we get a longer-term signal on a higher timeframe such as the daily or even weekly charts. Until then, I have to believe that rallies continue to offer selling opportunities in a market that has been grinding lower over the last couple of sessions. If we did break to the upside, it needs to be accompanied by the oil market rolling over.
Written by FX Empire