The USD/CAD pair broke higher during the course of the day on Friday, slicing through the 1.06 level. This level has been resistive previously, and as a result we feel that this market should continue to go higher now, as the market has broken above a significant barrier now. Now that we are above it, we feel that we will continue in the previous consolidation area that extends to the 1.10 level, but it could be a bumpy ride all the way out there. Ultimately, there’s no way to sell this market, simply because of the breakout, and the obvious support at the 1.07 level, the uptrend line that’s on the chart, and the 1.06 handle. With that being said, we believe that this market goes much higher and that buying on pullbacks will be the way to go going forward.
The oil markets are a little bit soft as of the last couple of sessions, but ultimately they are a bit firmer than one would anticipate seen as what has happened to the Canadian dollar. Because of this, we feel that this is a more negative sign of the Canadian economy more than anything else. Because of that, we feel that the market should continue to go higher and it should attract more people going forward, because of the obvious uptrend nature of this market and the fact that the uptrend line held, something that most traders would be aware of.
The US dollar should continue to strengthen against a lot of currencies, not just the Canadian dollar. If there is concerned in the stock markets, as there have been pullbacks from time to time, this pair will also go higher. We really don’t see any reason the short this pair, and would not consider doing so until we get well below the 1.06 level, something that we do not anticipate seen anytime soon as this uptrend has been rather significant and relentless over the last several months, save the recent pullback that we had seen. However, that pullback is nothing but a memory at this point.
