The USD/CAD pair rose during the session on Wednesday, slamming into the 1.04 handle. This area of course was resistive, as I had been talking about, and it is the area that we need to see a nice breaking of in order to start buying. A daily close above the recent high which is at roughly 1.0425 would be enough to get me to start going long, and I do have to admit that this long green candle that printed for the session certainly has me thinking that we may eventually find the momentum to do exactly that.
As the oil markets are tumbling, it makes sense of the Canadian dollar is getting beat up as well. However, it looks like the light sweet crude market may be getting ready to find some type of supportive action, and if that's the case we could very well see this pair fall as the Canadian dollar will strengthen.
We are still in consolidation
Until we break out to the upside, we are still in consolidation even though the Wednesday candle does look so strong. That's why I'm not ready to go long yet, and do recognize that we could very easily pullback. That would be at best a short-term trader’s type of move, and quite frankly with the candle being so strong for the session on Wednesday, it's a trade that I would certainly have no trouble passing up.
The 1.03 level should be supportive though, and because of that I am more than willing to go ahead and buy a supportive candle in that general vicinity. I don't know whether or not we can get above the 1.04 handle again, but I do know that if we get support down there in that region, it's at least enough room to pick up some profit. I have no interest in selling at the moment simply based upon the large green candle on Wednesday, and therefore I am in the "buy only" mode for this market as I think the Canadian dollar is going to struggle overall, at least from what I'm seeing in the energy markets.
