The USD/CAD pair initially fell during the course of the day on Thursday, but found enough support at the 1.09 level to turn things back around and form a hammer. This hammer of course suggests that the market is ready to go higher again, and it is with the overall trend so we do like the idea of buying on a break of the top of the hammer. However, the market should be choppy in general, because the area between the 1.09 level and the 1.10 level has been very consolidated.
A break above the 1.10 level would in fact be a very positive turn of events and we believe that the market would head to the 1.12 level at that point in time. It will probably still be choppy though, basically because there is so much in the way of noise in this market overall. However, if we can get above the 1.10 level, we feel that the uptrend should not only reach the 1.12 level, but probably go much higher and make a longer-term buy-and-hold type of situation.
On the other hand, if we break down below the bottom of this hammer, it’s likely that the market will drop to the next support level, which is the 1.08 level. At that area, we would expect to see a lot of buyers enter the marketplace, and let us not forget that there is a nice uptrend line from the market lows. We’ve been grinding higher for some time now, so quite frankly there is no reason whatsoever to sell this market until we get below the trend line, which is quite a bit below current levels. With that being the case, we are bullish of this market overall, we just simply looking for the right buying opportunity in order to get involved.
The markets might be best played in the binary markets as short-term moves will probably continue to be the norm in this marketplace. Again though, if you are tolerant of volatility, you could go ahead and buy directly in the Forex markets.
