The US dollar chopped around quite significantly against the Canadian dollar during the session on Tuesday, as we continue to see significant amounts of noise in the Forex markets. The 1.25 level underneath of course is a large, round, psychologically significant number, so was not surprising to see the market bounced during American trading. However, I believe that the downtrend is very strong, and I believe that rallies at this point should be selling opportunities. I believe that there is a significant amount of resistance all the way to the 1.26 handle at the very least, so I think that the waiting to see exhaustive candle’s is probably the best way to trade this market.
Selling short-term rallies
I am more than willing to sell short-term rallies on signs of exhaustion as they occur, and I believe they will. Pay attention to the crude oil markets, they have a massive influence on the Canadian dollar, that being the case, today features the Crude Oil Inventories announcement which of course can cause quite a bit of noise. Beyond that, the FOMC Interest Rate Statement and accompanying decision will cause quite a bit of noise as well. I believe that perhaps we may see short-term bullishness due to people closing out positions ahead of the announcements, but ultimately by the end of the day we should have clarity when it comes to this pair, and I believe that the next move will present itself on the daily close. Until then, you may find trouble in the markets as the noise will be massive. If we do break above the 1.26 level, that could be the end of the downtrend that we have seen as of late. Alternately, a fresh, new low should send this market looking towards the 1.24 handle.
Written by FX Empire