The US dollar rallied against the Canadian dollar right off the bat during the Monday session, and then went sideways. Then we would reach towards the 1.25 level above, which is a psychologically important level in this pair. Pay attention to this market, it will give you an idea as to how the US dollars going in general. This market is also influenced by petroleum markets, which the WTI Crude Oil market initially touch the $50 level and then pulled back. Perhaps we are seeing a reaction to the oil markets starting to roll over again, because if it does that does typically add bullish pressure in this market.
I believe the volatility continues in this market regardless what happens next. I believe that the market rallying towards the 1.25 level could offer and I selling opportunity, but I would need to see this market break down below the 1.2450 level before shorting. I see a significant amount of resistance all the way to at least the 1.2565 handle, if not the 1.26 level. Because of this, I believe that you’re going to see a lot of volatility and choppiness. With this being the case, it’s possibly a market that you want to avoid. Longer-term, we have most certainly broken down below a significant uptrend line, but the even longer-term uptrend line is below near the 1.24 handle, so a breakdown below there would be catastrophic. I don’t know for trying to form a bottom yet, I might be a bit early to suggest that, but certainly we are in an area that could be looking to do so. That makes for a very noisy market and of course very difficult trading conditions. Because of this, be very careful as the market can move against you rather quickly. Pay attention to oil, it should give you the clue as to where to go next.
Written by FX Empire