The USD/CAD pair initially fell during the session on Monday, but found enough support near the 1.2750 level to turn things back around and form a hammer. This shows that we are without a doubt very well supported below, and the recent break out to the upside should continue to push the market higher. However, we recognize that the 1.30 level above is massively resistive, so we may have to build up a little bit of momentum in order to reach that area. As far as breaking above there, it’s going to take quite a bit more momentum to do that, but ultimately we think it’s only a matter of time.
Oil markets have broken down a bit, and as a result it appears that the Canadian dollar will continue to suffer as one of the main drivers for Canadian dollar value is crumbling yet again. With this, we believe that the pair will eventually slice through the 1.30 level, but it might take a few attempts to actually do so. With this, we are bullish but recognize that the volatility might make this pair a bit difficult to trade at times.
You have to look at any different in this pair as offering value in the US dollar, and with that we feel that the pair cannot be shorted. The 1.24 level below is massively supportive, and with that we believe that every time this market pulls back there will be people looking to get involved. You might have to look to short-term charts in order to make a reasonable amount of profit, but at the end of the day if you focus on going long in this market only, it’s probably going to work out to your advantage more often than not. It is not until we break down below the 1.24 level that we would be concerned about the uptrend, and that should only send this market looking for the 1.20 level which of course is massively supportive. On the other hand, if we can get above the 1.30 level, this market should continue to go much higher in a buy-and-hold type of fashion.