By: DailyForex.com
The USD/CAD pair fell during most of the session on Monday, but did find support at the 0.98 handle in order to confirm that area as significant. However, I believe that since we have the nonfarm payroll coming out on Friday we won't see any significant moves until after that announcement.
Also pushing this pair around will be the oil markets, which showed some strength on Monday. The weekly chart on the light sweet crude market shows a hammer, and this of course signifies that the $90 level should be rather supportive in that market. This market is highly correlated with the value of the Canadian dollar, and as such I expect the USD/CAD pair to fall eventually. However, the jobs number has a huge affect on this currency pair quite often, and as such I think it may be next week before we actually see this move.
50 pips
The market currently finds itself wedged between two significant levels. The 0.98 level signifies support, while the 0.9850 level offers resistance. We simply have a 50 pips trading range, and this of course will favor the short-term trading crowd in the near-term. The long-term trend is most decidedly to the downside, and as such I actually prefer selling once we get into the resistance area at the top of this rectangle.
I see a significant amount of resistance all the way to the 0.9950 level, so this of course gives me more confidence in selling this pair. I do realize that the 0.98 level is acting fairly supportive, but unlike the resistance area, it has been sliced through previously.
With all this in mind, I do prefer to sell this pair on the longer-term trade as well. I think that eventually we will break below the 0.98 handle, and if we can get a daily close below the 0.9750 level I would think that the sellers would take control at that point. Oil markets will definitely have to be wants, but one cannot help but think there are serious headline risks to the upside in that market with everything that's going on in the Middle East. Between the oil markets and the Federal Reserve printing currency, it's hard to believe that this pair won't eventually fall. The trick of course, is going to be waiting for the right signal.