The USD/CAD pair had a relatively quiet day on Tuesday, as the markets simply have very little in the form of headlines to move on. Most of you will know that the Canadian dollar tends to follow the price of oil, and more specifically the light sweet crude markets. Because of this, if you're going to trade this currency pair it makes sense to pay attention to that particular contract.
Over the last four or five sessions, light sweet crude has been bumping underneath the $95 resistance level, and as such looks very stagnant. However, it should be stated that the oil markets in general have been relatively resilient and positive. With this in mind, it makes sense that as we take a rest, eventually the oil markets will break out of the $95 range and make a surge toward $100 a barrel.
If this happens, this could coincide with a move down to 0.97 in and quite a tidy fashion. This pair does have a major support level at that handle, and as such everything would line up quite nicely as these moves tend to eventually.
Sell on the rallies
This is a difficult pair to trade in times, mainly because the two economies are so interdependent of each other. The Americans need oil, and the Canadians need the Americans to sell to. This is why a lot of times this market will grind sideways and then suddenly make a move.
Because of the nature of this pair, I think a bounce could be coming, but would be more than likely an opportunity to sell from higher prices more than anything else. In fact, I don't feel comfortable going long of this pair until we break the 1.02 resistance level which of course is going to happen anytime soon. Because of this, I feel that we will eventually see the 0.97 level, and at that point in time be able to make more long-term decisions. In the meantime, I will simply sell rallies and try to make a few pips here and there on our way down to that support.
