The USD/CAD pair fell during the course of the session on Thursday, but found enough support below to bounce a bit and form a hammer. We believe that the market should find buyers in this general vicinity, so on a supportive candle we are willing to start buying, just as we are willing to start buying on a break of the top of this candle, although it is in the best looking of hammers – but it does have the advantage of being at the rate area.
Will find particularly interesting about this chart is the fact that the Canadian dollar could break down below the 1.08 level, on a day that the oil markets absolutely took off to the upside. It’ll be interesting to see how this plays out, but at this point in time it appears that if the oil markets skyrocketing can’t help out the Canadian dollar, we would have to suspect that the Canadian dollar is going to continue to struggle to make significant gains against the US dollar. Because of this, we feel that the market will more than likely continue to favor the US dollar overall, thereby making it a strong argument to see this market head to the 1.10 level.
Ultimately though, if we break down below the 1.08 level, this could send the market all the way down to the 1.06 handle which is a significant amount of support. With that, we feel that a supportive candle down there would not only be a buying opportunity, but it would be an excellent longer-term buying opportunity as well. At this point in time, we are simply waiting to figure out whether or not we are buying near 1.08, or the 1.06 handle. Expect a lot of volatility regardless, as is pair does tend to chop around quite a bit as the 2 economies are so intertwined. Ultimately though, we are bullish of this market even though the action recently has been a little less than desirable for buyers as every time we fall there are people willing to step in.
