The USD/CAD pair initially went sideways during the session on Wednesday, and even managed to drop down to the 1.3425 handle at one point. Having said that, the market then broke out to the upside after the Crude Oil Inventories number came out, showing that the demand for oil is falling again, the US dollar exploded to the upside and broke above the 1.35 handle. Because of this, looks as if the pair is ready to continue the longer-term uptrend, and I believe in buying dips going forward. I believe that the Canadian dollar will continue to suffer at the hands of weak demand when it comes to the crude oil market. I believe that if we can break above the 1.36 handle, the market will continue to go to the 1.40 level after that.
I believe that buying dips on short-term charts will continue to be the way to go going forward, and I have no interest in selling this market as the US dollar should continue to gain against the Loonie as oil will continue to be a drag longer term. If we can break down a little bit, or pullback, I think that the buyers that have missed the move during the announcement will get involved again. We have seen a lot of choppiness on the way down to the lower level, and therefore it’s likely that the very same choppiness will start to offer support on pullbacks, as we will see plenty of order flow and of course so-called “market memory” at those lower levels. Longer-term money continues to sell the Canadian dollar from when I see, right along with the oil market. Perhaps building up a larger position using small entries might be the best way to go long term.
Written by FX Empire