The US dollar went sideways initially during the session on Thursday, but eventually started to gain against the Canadian dollar. However, now that we are above the 1.25 level I think that the real fight begins. I believe somewhere near the 1.2550 level, we should see a significant amount of resistance. Obviously, there was a certain amount of psychological resistance at the 1.25 handle, but we have broken above there. I think that if we fail just below the 1.2550 level, thou might be a perfect area to start selling. Pay attention to the oil markets, because they have a significant amount of influence when it comes to this market as well. However, most of the trading has been due to the bond markets favoring the Canadian bonds over the US bonds.
Selling rallies, at least for now.
I still believe in selling rallies, lease for now. Ultimately, the market looks very likely to continue the downturn that we have seen, and the major support on the longer-term chart seems to be a little bit closer to the 1.24 handle, as it is an uptrend line that has been very reliable. If oil rallies, then that is probably enough of a reason for this market to turn around and start falling again. That being the case, I think it will be very interesting to see what happens next, but I believe that the downtrend is still very much intact, although this has been a nice turn around. If we break above the 1.2550 level, we could bounce for several handles going forward, and that could lead to a nice intermediate trade as far as time frames are concerned. Choppiness continues, but I still believe in the downtrend, lease for now as it has been so strong.
Written by FX Empire