The USD/CAD pair rose during the session on Wednesday, but as you can see struggle to get beyond the 1.10 level. This is an area that I have been talking about for some time, and it was in fact my target. The market came close enough during the day, and therefore I exited this pair. Having said that, what I find interesting is now that the market has pullback, it has now formed a shooting star at an area that is obvious resistance in the form of the 1.10 large round number. Obviously, a lot of traders have the same idea as I did, and therefore started taking profits.
The Canadian dollar has been beat up significantly as the jobs number out of that country was so poor last week. On top of that, the jobs number of the United States wasn’t exactly stellar either, and as the Canadians send 85% of their exports into the United States, they need a strong US economy in order to buy what they produce. In a sense, this pair tends to be a bit counterintuitive at times.
Oil markets continue to fall, although they did have a decent day on Wednesday.
The oil markets continue to fall overall, but the Wednesday session did see them gain a significant amount. This would’ve coincided with the strengthening of the Canadian dollar, therefore bringing this pair back down to form that shooting star. Because of this, I believe that the USD/CAD pair is going to continue to mirror in an inverse direction the WTI Crude Oil markets. Because of that, I feel that if the WTI market can get above the $96 level, this pair will more than likely break down somewhat significantly.
On the other hand, if we get a resistive candle near the 96 level in the WTI market, I believe that would coincide nicely with the support that we should see the 1.09 handle in this market, or possibly the 1.0750 level, which was the site of the most recent breakout. There are times when these two markets run hand-in-hand, and this seems to be one of them.
