The USD/CAD pair has been range bound for some time now, and for traders that cannot trade in this type of environment, this pair has been very tough to make money in. Oddly enough, range bound markets are some of the trickiest for many of my trading friends, even though there is a well-defined boundary on both the top and bottom.
The parity level has been massively resistive lately, and the 0.98 level has been supportive. This is probably because of all of the noise in the oil markets lately. The geopolitical atmosphere lately has been very risk averse, and this will weigh on many commodities, oil included. The fact is that the oil markets have been helping to keep this pair bound tight over the last couple of months, and as long as there is still a bit of a range in the oil markets, this pair will be in a range as well.
The oil markets are showing severe pressure to the downside at the moment though, and are pressuring the very bottom of support for the bulls. Because of this, there is a chance of a breakout finally, but the oil markets will have to give way first. The $95/barrel level is important to the bearish momentum continuing in the Light Sweet Crude markets, and if it gives way, we could finally see a move in this market – to the upside that is.
Parity to 1.01
The resistance above is all the way to 1.01 as far as I can tell. It isn’t until we get above that level that I am comfortable buying this pair. The area has been very resistive over the last couple of months, and if we can breakout, this pair should start moving rapidly.
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The candle for the Friday session formed a hammer right on the parity level, and the 200 day exponential moving average. This bodes well for the bulls on first glance, but with the massive resistance we have seen – being careful is probably the best way to go. If we manage to break the bottom of the Friday candle, this would send the pair back down looking for the 0.98 handle.