The USD/CAD pair rose during the session on Tuesday, capturing about half of the losses that it had suffered on Monday. However, we are not out of the woods yet, as we certainly look like we could drift a little bit lower at this point. What I find most interesting about this chart right now is the fact that the shooting star that formed on Friday of last week was at the 1.12 level. This is an area that I have suggested would be a bit of resistance going forward, and now I think if we can get above that area, this market could shoot straight up. After all, that’s what this market tends to do over time, grind sideways and then suddenly take off in one direction or the other.
Oddly enough, stronger oil markets have not help the Canadian dollar at all. I find this is interesting, as the typical correlations have been thrown out of the window. That’s why I believe that the main driver of this pair right now is the Federal Reserve and the idea of tapering off of quantitative easing more than anything else.
1.12 continues to be a major area for me.
Again, I cannot stress enough how much I believe that the 1.12 level is holding this pair back breakout. However, we do have supportive areas, and I believe that the 1.10 level is essentially the epicenter of this entire consolidation area. I would suspect that the 1.09 level is massively supportive as well, so anything between the 1.10 and 1.09 levels should be looked at as massively supportive.
The great thing about breaking above the 1.12 level now is not only does it break above a large round number, but it also breaks above a shooting star, which is always a very bullish sign. It would be a couple of different reasons to believe that the pair was going higher, and based upon longer-term charts I believe that the 1.15 would be the next stop. In the meantime though, I am simply waiting for some type of pullback and supportive candle to continue to buy this pair.
