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USD/CAD Buying Dips with Significant Support - 8 September 2015

By Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

The USD/CAD pair initially tried to fall during the session on Monday, and what would’ve been very illiquid trading. This is because most of the volume is actually produced during the North American trading hours, and with the Americans away at Labor Day, this would’ve essentially left this to the Europeans and the Canadians to move the pair. However, you have to keep in mind that the market does tend to react to the oil market, which of course showed a lot of weakness during the day. With this, it appears that the market should continue to go higher, and if we can get above the 1.3350 level, I would be very comfortable buying this pair again as we should then head to the next large, round, psychologically significant number in the form of the 1.35 handle.

Buying dips as well

I believe in buying dips in this pair as well, as I think we have more than enough significant support below. On top of that, keep in mind that breaking above the 1.30 level was a momentous event, as it was the area that kept the buyers at bay during the financial crisis. That being the case, I have to believe that there is a massive amount of orders that have been blown through in that area, and now should offer a significant amount of support. With that, I do like buying this pair on dips and I have to admit that the economic situation in Canada hasn’t exactly been strong lately, and that of course influences my decision as well.

That being said though, you have to keep in mind that the pair does tend to grind sideways for long periods of time, as the 2 economies are so intertwined. With this, I think that you're going to have to play short-term trades on pullbacks, and then eventually get a little bit more adventurous when it comes to a longer-term trade if we can get above the aforementioned 1.3350 level.

Christopher Lewis
Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.

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