During the day on Wednesday, we ended up going back and forth during the course of the session in order to form a rather neutral candle. We tested the 1.40 level, and it now appears that if we can break above there it would be a very strong sign. At that point time, we would be buyers as the market would continue the longer-term uptrend. However, we do recognize that there is quite a bit of volatility to deal with. After all, there are a lot of moving pieces at the moment, and with that being the case sudden pullbacks will of course occur.
Ultimately, keep in mind that the Canadian dollar is highly influenced by the crude oil markets, which of course are very negative overall. With that being the case, the market looks as if it should continue to favor the US dollar in the longer-term, as the oil markets simply do not offer enough support for the Canadian dollar general.
Having said that, it makes sense that the longer-term trend continues as we will eventually reach back towards the 1.45 handle. Pullbacks going forward should continue to be buying opportunities given enough time, and we will use supportive candles on pullbacks in order to start buying again. We have no interest in selling, because quite frankly there is enough concern out there that it should continue to put a bid into the US dollar overall.
The trend is very strong, and the fact that we broke above the 1.30 level was a very strong sign previously as well. After all, we finally sliced through the area that the Forex markets showed as massively resistive during the financial crisis, that of course is a very massive sign of strength. Ultimately, the market should continue to go higher but we are going to see volatility as there is so much uncertainty. At the end of the day though, it’s probably safer to air on the side of caution, meaning by the US dollar. At this point time we have no interest whatsoever in selling.
