The USD/CAD pair initially fell during the session on Thursday, but as you can see the 1.0550 level offered support, and sent the market much higher. The resulting candle is very positive looking, and as a result the market tested the 1.0650 level. I still believe that there is a significant amount of resistance at the 1.07 level, and therefore we will have a little bit of a slowdown in this bullish move. However, if we can get above the 1.07 level on a daily close, we are heading to the 1.10 handle before it's all said and done.
Pay attention to the oil markets, they always push the Canadian dollar around given enough time. Oil does look a bit soft at the moment, and therefore the US dollar could very well continue to appreciate against the Canadian dollar. I think that the 1.05 level will be the "floor" in this market, and therefore cannot sell this market until we close below that level on a daily chart.
It is the end of the year though.
It's the end of the year, so there is the possibility that liquidity will drive this market, and thereby allowing traders to square of their positions, but perhaps not move the markets much. Ultimately, this pair does typically go sideways for long periods of time, and then shoot in one direction or the other. I believe that we are about to see where this impulsive move higher, but it might actually be a couple of weeks away.
Nonetheless, I am more than willing to start buying. Once we get above the 1.07 handle, as a buy signal is a buy signal after all. The market could move rather quickly. Because of the lack of liquidity as well, so this could work out in your favor also. I still believe that the uptrend continues, so regardless, I am more than willing to buy. On a break below the 1.05 level though, I would probably wait until after the New Year holiday to trust that move.
