The US dollar pulled back slightly during the trading session on Monday but found enough support near the 1.26 level to turn around and rally. Remember, the Canadian dollar is highly sensitive to the oil markets, so oil markets continue to fall, that will push this market higher. I believe at this point most traders are using the Canadian dollar as a proxy for oil as per usual, so that’s the most important chart watch, the WTI Crude Oil market. Ultimately, I think that the volatility continues, but I think we are trying to rally towards the 1.29 level above, which has the beginning of major resistance built into the 1.30 level. That’s an area being broken above would be very bullish, and be very significant, probably adding even more momentum.
I think that pullbacks at this point should be buying opportunities, and I believe that the 1.25 level underneath will be the hard “floor” in the market, and essentially where the uptrend would into. If we were to break down below that level, the market would drop towards the 1.21 handle underneath, which has been important in the past. Overall, I believe that the market continues to be a “buy on the dips” situation, and I think that the traders out there in the Forex world will continue to look at this market as such. I have no interest in shorting, least not until we break significantly below the 1.25 handle.
Written by FX Empire