The USD/CAD pair has been one that has been very good to the scalpers out there for some time. However, on Thursday we got a significant breakout in this market as the 1.01 level gave way. This was the signal that I had been looking for in order to go long. Before this happened, I could only assume that the range between parity (with a wide band of resistance all the way to 1.01) and the 0.98 handle was still intact.
The oil markets have led the way as the price of Light Sweet Crude has really come off lately. In fact, the market is down all the way to the $92 area, falling from $106 in just two weeks. This move has seen the Dollar rise against most currencies, and quite frankly the USD/CAD market has been lagging this move. Now that the support has fallen apart for the oil markets, the Canadian dollar continues to weaken.
The commodity markets in general look very weak at the moment, and this could continue as the global outlook is so cloudy. The industrial demand for commodities in general could fall quite rapidly, and this market will be no different. Without a doubt, the risks are skewed to the downside for commodities at the moment.
Hammer or “Hanging Man?”
The candle for the Friday session saw the market fall off for much of the session, but the bulls came back into the pair to push prices higher on the day. The result is a candle that looks much like a hammer, and as a result this should in theory have markets rising. However, a break of the lows of this candle would also be very bearish. I don’t consider the bottom of the hammer broken until we close below the 1.01 level though, and the handle should produce some kind of reaction. (Better safe than sorry.)
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With this being said, I think we should continue higher, and a break of the top of the Friday session has this pair going to 1.0350 or so, which is the next resistance level. The breaking of the bottom of the candle has this pair looking to reenter the range again.