The USD/CAD pair tried to break above the 1.10 level during the session on Tuesday, and had some luck. However, as you can see we ended up pulling back below that level in forming a nasty looking shooting star. The shooting star of course signifies weakness, but we are not sellers here, we believe in the longer term validity of the uptrend. With that, we are looking at supportive candles below as opportunities to buy as we trying to build momentum to the upside in order to break out.
The oil markets have been a bit soft lately, and that continues to work against the Canadian dollar. However, the 1.10 level is a significant resistance level based upon longer-term charts as well, so it makes sense that we struggled here. If we can get above the highs from the session on Tuesday, we believe that would be reason enough to start buying this market as it would show a real resurgence of strength in a market that has been bullish to begin with.
We see potential support at the 1.08 level, the 1.07 level, and the 1.06 level. With that, we are looking for supportive candles in those general vicinities in order to take advantage of what is and has been a very strong uptrend in the US dollar. The Canadian dollar will continue to weaken overall in our opinion, especially in relation to the US dollar as the oil markets have been soft. On top of that, gold is not giving much of a boost to the Canadian dollar as well, and the most recent jobs report out of Ottawa suggested that the Canadian jobs market is much worse than originally thought. With that, the Canadian dollar will continue to weaken against most currencies, but especially the US dollar as it has been so much stronger than many of the other ones out there. We believe that the market will try to get to the 1.12 level first, and then the 1.15 level. Pullbacks will more than likely be seen as opportunities for people who have missed out originally.
