- The USD/CAD has rallied a bit during the trading session on Thursday but has given back some of the gains once we got to the 1.34 level.
- At this point, the Canadian dollar might have a bit of trouble coming, as the oil markets have been hammered.
- There are a lot of concerns out there when it comes to demand for crude oil, and therefore we need to pay close attention to the fact that the market over there is threatening to break through support, and if it does it’s likely that the US dollar will rally against the Canadian dollar as the Loonie is used as a proxy for crude oil by Forex traders.
It’s worth noting that the 200-Day EMA sits near the 1.31 level and is rising. At this point, you would have to think it would be a bit of a “dynamic trendline” in this market that’s in such a strong move to the upside. Having said that, we did pull back during the trading session on Thursday to form a bit of a shooting star. If we break above the top of the shooting star, that should allow the market to go much higher, perhaps reaching to the 50-Day EMA, and that eventually the 1.36 level.
Noise Ahead
It’s also worth noting that we are between the 200-Day EMA and the 50-Day EMA indicators. Typically, when that happens, you are about to see a squeeze in one direction or the other, so therefore I would anticipate a bigger move coming rather soon. Once we get that impulsive candlestick, you will be able to juxtapose the potential target. At that point, if we bring it to the outside, then we could go looking to the 1.38 level. On the downside, the first area that you would be looking at of course would be the 1.30 level, and then eventually the 1.28 level.
In general, this is a market that I think continues to be very noisy, and you should pay close attention to oil. If oil does recover, then it may calm things down for a while. However, if oil starts to break down, we could see this market really take off to the outside. It’s also worth paying close attention to the 10-year yield, because it starts to rise in America, which will also let the dollar.
Ready to trade our Forex prediction today? We’ve shortlisted the best Forex trading brokers in the industry for you.