The US dollar had a very eventful day against the Canadian dollar. This of course had a lot to do with what was going on in the crude oil markets, as WTI shot much higher. The market broke to the upside in oil, and that of course suggests that the Canadian dollar may be undervalued. I look at this chart and see that the 1.3650 level looks to be supportive, and if we can break down below there, I think the market will then go looking for the 1.36 handle after that. That is an area that was very important on the longer-term charts, and longer-term questions will have to be answered in that vicinity. I believe that the market will continue to be volatile, but I also recognize that the market may test the 1.37 handle above if we can break above the shooting star on the hourly chart.
The market has rolled over a bit during the day, so it looks likely that a rally will struggle at the 1.37 handle. So, we may have a bit of “back and forth” opportunities as well. I believe that the market gives us the opportunity to play the volatility but what I would really be interested in is a nice supportive bounce off the 1.36 handle as it would continue the longer-term uptrend. Oil seems to be keeping the gains, and that of course has a lot to do with what happens in the Canadian dollar markets. I don’t see a clear path to a longer-term trade, least not yet so short-term trading is probably about as good as this market gets. If we did breakdown below the 1.36 handle, that would be a longer-term and massive signal in this currency pair.
Written by FX Empire