The USD/CAD pair had a negative session on Monday, but you must remember that was Martin Luther King Jr. holiday in the United States, and this pair predominantly trades most of its volume during the North American session. Because of that, this will be one Forex pair that can only be thought of in the larger context. That being said, we did get a little bit of a bounce towards the end of the session, and as a result form something along the lines of a hammer. The hammer of course is sitting just below the 1.10 level, which is massive resistance as far as I can tell. It’s a large, round, psychologically significant number, and an area that has produced reactions on the longer-term charts as well.
With that, I am waiting for a daily close above the 1.10 level in order to not only buying this pair again, but add to it already fairly decent sized position. This would be more of a buy-and-hold type of proposition, but I think we would more than likely target the 1.12 level first, and then the 1.15 level. This market does tend to move in these parabolic actions more often than not. You see lots of consolidation in this market, and then a sudden move in one direction or the other. This is because the two economies are so intertwined, that the bevy of fundamental factors underneath can get relatively confusing.
Oil prices could be coming down again.
With the possibility of Iranian oil hitting the marketplace, this could drive oil prices down even further. The Libyans have increased the global supply as well, so we could have a bit of a 1-2 punch when it comes to bearish pressure in the oil markets. Member, Canada is highly sensitive to the price of oil, and therefore this could continue to work against the Canadian dollar and push this pair higher.
All that being said, I still wait for a daily close above the 1.10 level in order to start buying more, or perhaps a pullback the show signs of support at lower prices.
