The Canadian dollar saw a massive surge in value during the Friday session as the "risk on" trade came into play. This was especially obvious in the oil markets, which saw the light sweet crude markets gain 9% during the session. When crude oil moves that much, the Canadian dollar absolutely has to appreciate right along with it.
What I found interesting was that the pair stopped right at the 1.0150 area. This area has served as support a couple times recently, and it does suggest that there was a bit of Canadian dollar short covering pushing this market along. Obviously, it does set up a fairly easy signal to sell, and much like my analysis in the EUR/USD pair, I think the Monday open will probably tell the story.
It should be noted that the later we get into the week this pair will probably move less and less. This is because of both the July 4 Independence Day holiday in the United States, and the fact that Canada Day is this coming week as well. Nonetheless, the nonfarm payroll announcement is on Friday, and this is normally a catalyst for this pair. With that in mind, the action in this pair may be done by the end of the session on Tuesday until Friday morning in the United States.
Strong solid red candle
With the type of candle that we formed for the Friday session, it is hard to argue against shorting this pair. With that being said, this is why I think the Monday morning open is so important. If we get the gap down, I will be short of this pair at that point. I believe that if we fall from here, we could see the parity level in fairly short order.
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On the upside, is going to be very difficult to go long this pair at this moment in time. I personally don't like buying into bars that are this strong and confident, and as such will have to wait for some type of supportive candle even though I truly prefer to be long this pair overall at the moment. So having said this, the only play I see is a gap down on Monday morning, unless of course we get some kind of massive gap up based upon headlines out of Europe.