The USD/CAD pair initially fell during the session on Wednesday, but found enough support below the 1.11 level in order to bounce and form a hammer. This was especially interesting considering that was the FMOC meeting day as well, and as a result we think that this market continues to show strength going forward. The hammer of course suggests strength anyways, and we do believe that the 1.12 level is the crucial level that we need to break above in order to continue going higher. If we can do that, we think the market goes to the 1.15 level, although it will more than likely be a very bouncy ride up to that level.
Below, the 1.10 level offers quite a bit of support in our opinion, and therefore we do not think that the market gets below that level. With that, the market should find plenty of buyers all the way down to the 1.09 handle, and we will be more than happy to start buying on a supportive candle anywhere between here and there. Again though, if we break the top of the hammer, the market should go much higher.
Pay attention to the oil markets as well, as they have been very volatile lately, and seem to have plenty of noise between tight levels which of course signifies a lot of busy noise. With that, we believe that this market will continue to be very volatile, but as per usual we think there will be a reckoning point where the market simply breaks out or down in a very significant fashion.
We believe in the uptrend of this market over the longer term, simply because the Canadian economy is so highly leverage to petroleum and commodities in general, which of course all have been beat up with the exception of possibly natural gas. Although natural gas is found in abundance in Canada, the Americans have more than enough of it to worry about importing massive amounts. With that, we are only buying on dips, or break above the top of the hammer.
