As you can see on the chart, I had an ellipse marked from the previous session, an area that I thought was going to cause a bit of support. It does look as if that’s happening on the one hour chart right now as I record this video, and it looks as if the US dollar is ready to continue building bullish pressure against the Canadian dollar. This makes sense, the oil markets have been struggling as of late, and therefore I think we may revisit the highs that had recently been put in this market, closer to the 1.29 handle.
The 1.29 level is an interesting place, mainly because I see resistance extending to the 1.30 level, and when you see resistance that is this wide, if you can break above it, this will normally set a lot of momentum into the market. I suspect at this point the market may pull back occasionally towards the 1.29 handle, but short-term traders look to be ready to pick up the greenback along the way. This will be accelerated if the oil markets break down significantly, which quite frankly with US shale producers jumping on board, it’s very likely to do so. Oversupply and crude oil is coming back, and that of course will make the Canadian dollar soft. The alternate scenario is if we break down below the 1.25 handle, then I think the market probably drops for several days.
Written by FX Empire