USD/CAD went back and forth during the Tuesday session as we continue to tread water in the vicinity of 0.9850 or so. This pair has been rather choppy lately, and as a result it has been very difficult to trade. This market has been fairly sideways lately, and as a result it looks like we are waiting for some type of signal as to which direction to go.
We are biased to the downside though, and believe that it is the path of least resistance. After all, it is the long-term trend and we are fairly close to the trigger that would send this market into another leg down. Remember, this pair tends to fall as oil prices rise. And when you look at the oil prices lately, you can see that there is a certain amount of pressure building up in those markets and look like they are ready to break out. With this being the case, we think there will eventually be a sudden move down in this market place.
Looking this chart, you can see that the 0.98 level is that support zone that needs to be overcome by the sellers in order to push the market lower. On the upside however, we see the 0.99 level as the very first hurdle, followed quickly by the 0.9950, the parity level, and the 1.0050 level as resistance. Looking at this chart, it is obvious that is much easier for this pair to fall than it is to rise. With this in mind, we are essentially looking to sell this market only at this point.
We believe the rallies should offer selling opportunities, and most certainly a break below the 0.98 handle would also do the same. We think that any of the levels mentioned above could provide enough resistance to offer a sell signal going forward as well, so we have more or less an open ended type of set up in this marketplace. We believe that if the breakdown finally comes, we should see a move down to the 0.95 handle in relatively short order. It isn’t until we clear the 1.0050 level that we are willing to start buying again.
Written by FX Empire