The USD/CAD pair had a very positive session on Tuesday, finally breaking well above the 1.0725 level. This is the area that we’ve talked about for some time has been absolutely vital for the buyers to break above, and they have certainly done so with gusto now. That being the case, this market now looks like it’s free to go much higher, aiming for the 1.10 level given enough time. We believe that ultimately that will happen, and with the weakening oil markets, that is yet another reason why this move may continue.
During the session, the trade balance numbers out of the United States were much better than anticipated, while the trade balance of his out of Canada were much worse than anticipated. Because of this, that essentially represents the way money flows across the border as the to do so much business with each other, and now it makes sense that the Forex markets would respond in kind.
Pullbacks on shorter-term charts will more than likely be nice buying opportunities going forward, and that’s exactly how we will treat this chart. We fully expect to see the 1.10 level hit fairly soon, and that will only be exacerbated if we get some type of strong nonfarm payroll number coming out. Until then, we expect there to be mild bullishness, but if that adds to its going on, we would expect this to be a very massive and impulsive move. In fact, it’s not uncommon for this market to grind sideways for some time, and then suddenly shoot straight up or straight down. That being the case, the market looks like it is doing just that at the moment.
This is why we suggest using short-term charts as entry points, because he gives you the ability to take care of fine-tuning the entry, and seeing exactly when this market could be entered in order to take advantage of what is an obvious uptrend at this point. Based upon the measurement of the previous consolidation area, and the fact that the trend is a strong, we feel that 1.08 will more than likely offer a little bit of resistance, but quite frankly that will be short-lived at best.
Written by FX Empire