The USD/CAD pair has been a real pain lately. It seems to want to just jump around randomly, and it certainly isn't following what's going on in the oil markets. Quite to the contrary, the Canadian dollar has been getting beaten up while oil continues to rise. Anybody who's treated Forex for any great length of time can tell you this is not normally the case.
The action from the Monday session was rather bullish for most of the day, but the selloff later on caused a massive shooting star candle to form. This shooting star is focused on the 1.0050 level, an area that I have mentioned several times. Because of this, it looks like the market is starting to run out of steam again, and that we could see a fall from this level.
Short-term opportunity
I see a break of the bottom of the shooting star for the Monday session as an opportunity to sell this pair down to the 0.9950 handle. Below there, it would be difficult to gain much traction as there is plenty of support and the ways all the way down to the 0.98 level. This isn't to say that it can happen, rather that this looks like a tight market that's only offering short-term opportunities. Sometimes you have to simply take what the market is offering you, and right now this market isn't offering large trades.
This pair will fall when the risk appetite a strong around the world, which makes sense considering we have seen quite resilient stock, markets around the planet. That being the case, this pair should continue to fall over the longer term, but I think that this pair is at a bit of a crossroads at the moment, and as a result we could get sudden moves in one direction or the other.
Obviously, if we managed to break above the 1.01 handle, I would be more than happy to start going long as this pair would show a significant momentum change to the upside. Until that happens, I still believe that it's easier to sell this pair.
