The USD/CAD pair had a very strong showing on Friday, especially when you consider how strong it's been over the last couple of sessions. The fact that we barely pullback, to me shows quite a bit of strength. Quite frankly, I wonder how much higher this pair would have gone by the end of the session if it weren't for the fact that we are heading into the weekend?
The Canadian dollar should continue to be on the back foot, not necessarily because of problems in Canada - although there have been some questionable economic numbers out of that country lately - but rather because of the Federal Reserve and it’s tightening of monetary policy. (At this point time I should point out that is not necessarily monetary policy tightening, it's just that it appears the Federal Reserve is going to step out of the quantitative easing game thereby seen interest rates rise anyways.)
Buying the pullbacks.
I believe this point time we should be thinking about buying the pullbacks, as the breaking of 1.04 was in fact significant. In fact, I believe that pullbacks should offer buying opportunities going forward for a significant amount of time, and I also believe that we will eventually see 1.08, if not 1.10 by the time this move has completed.
The USD/CAD pair has a long history of consolidating and grinding sideways for long periods of time, and then suddenly exploding in one direction or the other. Also, I know that this chart looks like it's an explosive move so far, but we have only risen about 250 pips, which isn't exactly a major move when it comes to this particular currency pair. There have been times in the past were I've seen a move 10 handles in what seems like a blink of an eye.
Looking at this chart, I see aptly no reason to short this market unless we managed to close below the 1.0150 handle, which would be a massive turnaround from where we are right now. That would essentially be making a "lower low", which of course is very basic technical analysis.
