Daily Forex Reports | by FX Empire | Friday, 24 July 2015 06:53 UTC
The USD/CAD pair initially fell during the session on Thursday, but found enough support near the 1.2950 level to turn things back around, and form a massive hammer. This hammer of course is a very bullish sign, and the fact that it is using the 1.3 level as support suggests that the buyers are trying to pushes market even higher. Adding in the weakness that we are starting to see in the WTI Crude Oil markets yet again, it makes sense that this pair continues to go higher as the Canadian dollar is of course so highly influenced by oil markets in general.
As the US dollar goes higher in general, this of course hurts commodities. As commodities go lower, especially petroleum, the value of the Canadian dollar falls. It is a bit of a never-ending cycle of sorts, as one problem is beating off of another. With this, we think that we are eventually going to break out to the upside and continue to go much higher given enough time.
If we rally from here, and pullback, we look at that as “value” in the US dollar, as the market should continue to go much higher, perhaps heading to the 1.35 level. With this, the markets will enter a longer-term “buy-and-hold” type of situation, and with that more than likely going to be a situation where traders will continue to make massive amounts of money as they hold onto their Canadian dollar shorts.
Ultimately, we believe that the 1.28 level is the “floor” in this market, and as long as we can stay above there we have no interest in shorting this market. Even if we break down below the bottom of the hammer from the Thursday session, we believe that there are plenty of buyers below. With this, we believe that we are finally going to break above the resistance barrier from the financial crisis several years ago that had been so stubborn. Don’t get us wrong, it’s going to be a bit difficult to get above, but this will only make the action choppy, as we will finally get above those levels.
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