The USD/CAD pair has been one that I’ve been bullish of for some time now. The US dollar continues to appreciate overall against the Canadian dollar, which I find interesting considering that the oil markets have been rising at the same time. This tells me that the motion in this market has more to do with the US dollar, and therefore the Federal Reserve, and then anything going on in the commodity markets. Typically, oil will push the value of the Canadian dollar higher when it is in demand, but we have not seen that. That tells me that the Canadian dollar is inherently weak at the moment, and as a result I expect to see this market go higher.
Looking at the area above, I recognize that the 1.12 level is resistive. If we can get above that level, I would anticipate this market going higher than we had originally, and then heading towards the 1.15 handle. That is a major resistance area, so I would anticipate that the market pulls back if we do hit that level.
Pullback coming?
With the shooting star that formed during the Thursday session, one has to think that a pullback could be coming. It doesn’t matter to me though, because I see a significant amount of support below, so therefore I don’t think that any pullback that we get at this area is going to be of any significance. Because of this, I am actually looking at this pullback as a potential buying opportunity, and will be more than willing to buy a supportive candle closer to that 1.10 line on the chart. I think that significant support goes all the way below there and to the 1.09 handle, and as a result I have absolutely no interest in selling this market at the moment. Quite frankly, I fully anticipate seeing the 1.15 level hit sometime during the summer, as the Federal Reserve continues to taper off of quantitative easing. Remember though, this pair tends to go sideways for long periods of time, and then suddenly explodes in one direction or the other.
