The USD/CAD pair fell during the course of the day on Tuesday, testing the bottom of the hammer that had formed on Monday. That being the case though, we simply look as if we are going sideways for the time being, and we believe that there is plenty of support down at the 1.09 level. With that, looking for supportive candle in that general vicinity in order to build up enough momentum to break out above the 1.10 level, an area that has been massively resistive. This area been broken above though would be a significant move, as the US dollar would more than likely head to the 1.12 level against the Canadian dollar.
Although the correlation is breaking down a bit, keep in mind that the oil markets that typically will favor the Canadian dollar when going higher have been falling for some time. Because of that, it’s very likely that the Canadian dollar will be shunned overall, so we actually are very bullish of this pair. It doesn’t really matter what happens at this point, we are essentially looking for a buying opportunity at this area and this pair is one that we have absolutely no interest in selling.
The trend line that is on the chart below needs to be broken down and the market needs to move lower than that in order to even consider selling, something that does not look very likely anytime soon. With that, supportive candles will be considered to be nice buying opportunities in a market that has been extraordinarily bullish for several months. With that, we feel that the market should continue to have plenty of momentum underneath, thereby making this one favorite markets to trade at this point.
This being the case, we feel that this market can be thought of more or less an investment, as the grinding action of this pair tends to make patience necessary for trading the USD/CAD pair. After all, it does go sideways for long periods of time, and then suddenly will shoot one direction or the other. With that being the case, be patient and you should be rewarded.