- The USD/CAD has initially fallen against the Canadian dollar, breaking below the 50-Day EMA.
- However, we have turned around to show signs of strength and this has sent the US dollar above the 1.35 level quite handily.
- In fact, it looks like we are seriously threatening the 1.36 level, an area that has been resistant multiple times.
While we had formed a massive head and shoulders previously, we also managed to hit the target, so now it looks like we are going to turn around and continue the overall uptrend. This was helped greatly during the day on Monday as the crude oil market fell, as it looks like crude oil demand is going to continue to fall, and that of course makes a huge difference with what people look at the Canadian dollar for. The Canadian dollar course is a proxy for oil, at least for Forex traders. Beyond that, there are a lot of concerns when it comes to the housing market in Canada, especially around the Greater Toronto Area.
Choppiness Ahead
If we were to turn around a break below the bottom of the candlestick, then it’s possible that we could go down to the 1.3 to handle, but I don’t see that happening very easily. We would need to see a big move against the US dollar, in general, to make that happen, and quite frankly the Canadian dollar itself has a huge set of issues behind it that could continue to cause problems. If we break above the 1.36 level, that is likely that we could go to the 1.38 level, then possibly even the 1.40 level over the longer term.
This pair will be choppy, but that’s nothing new as these 2 countries are each other’s greatest trading partners, so it’s a bit like trading the Euro against the British pound, it’s a very noisy and choppy pair. You should also keep in mind that the Canadian dollar is a bit of a commodity currency, so in general it will follow right along with others like the Australian dollar, New Zealand dollar, South African Rand, etc. against the greenback. In other words, if we have US dollar strength, this pair will follow right along with many of the others. It may not be the cleanest of moves, but it looks like the buyers are coming in to push things higher.
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