The USD/CAD pair broke higher during the session on Tuesday, and even broke the top of the shooting star from the Monday session, and obviously bullish sign. We like this pair now that we have proven the trend line to continue to be supportive from the longer-term move out, and now we believe that the market will target the 1.08 handle.
On top of that, the oil markets or falling rather hard, and that of course will continue to work against the value of the Canadian dollar in general. Compounding the misery of the Canadian dollar is the fact that the recent employment numbers out of Canada where absolutely horrible also. With that, we don’t see any reason whatsoever to sell this pair, and believe that it will in fact continue to go higher, and eventually breaking the 1.08 handle, moving into the previous consolidation area that extends all the way to the 1.10 level.
Above there, this market moves to the 1.12 handle, and beyond. Pullbacks at this point in time should continue to offer value, and should bring in short-term traders to continue to take advantage of the longer-term move. The fact that we held this trend line was in fact important, and as a result we believe that this market is ready to continue higher for the longer term, but recognize the fact that this pair tends to go sideways for long periods of time. Quite often, we will grind sideways for a couple of weeks, only to turn things back around and getting an impulsive candle in one direction or the other.
Ultimately though, we believe that the market is probably going to enter a cyclical bull market, which means that we could see a significant move. However, the Canadian dollar tends to be a rather choppy affair against the US dollar, so again, you will have to be comfortable hanging onto volatility, which is something that this pair offers time and time again. However, if you are in the pair when we make the impulsive move, you can be rewarded quite rapidly.
