The USD/CAD pair initially tried to rally on Friday, but turned right back around as the jobs number was so soft. We broke below the 1.35 handle, and that suggests that we are going to continue to drop from here. However, when you look at the longer-term charts, there is an uptrend channel that the market has followed. The 1.3250 level underneath should be massively supportive, and ultimately this market should continue to find buyers given enough time, but obviously it looks as if the sellers are in control for the short term. I also recognize that the oil markets have a massive influence on this market, and as oil falls, I believe that it’s possible that will drive the uptrend from this market back into favor. Oil markets were very volatile on Friday, and did gain a bit but I think it’s only a matter of time before trader start to look at the situation and the oversupply of the market.
I believe that we will continue to see choppiness in this market, as we will have several different problems and influences when it comes to this pair, I think ultimately oil becomes the biggest deal but right now it appears that the job situation has had more to do with the move than anything else. This is a short-term move though, so I prefer to follow the longer-term move off the short-term charts. I suspect that we will have a significant amount of support near the 1.3450 level, and most certainly on the longer-term charts I see a significant amount of support at the 1.3250 level. I’m simply waiting for some type of bounce or even a move above the 1.35 handle before then to get involved to the upside. Short-term traders may be willing to sell this market, but I still would be concerned and that trade.
Written by FX Empire