The US dollar collapsed against the Canadian dollar during the day on Wednesday, as oil markets rallied. Having said that, it was a bit of a mixed signal when it comes to oil and I think part of what we are starting to see is a short covering rally. That makes sense, the oil markets have been sold off so drastically. Alternately though I think that the 1.32 level above is massively resistive, so given enough time I would like to see the market try to break above there. I also believe that the 1.30 level underneath should offer a bit of a floor, so if we can stay above there I’m going to be looking for a daily candle that show signs of impulsivity to the upside. Alternately, if we break down below the 1.30 level, then I think we go to the 1.28 handle. Currently, the market seems to be focusing more on oil than anything else, and that of course has seen a little bit of a resurgence.
I’ll be in Toronto this weekend, with my eyes wide open.
This weekend, I’m going back to Toronto and the thing that I noticed the most changed since the previous summer was the extreme lack of construction. A year ago, construction was booming in Toronto but currently or it is falling apart. I believe this is a bubble that is looking for a needle, so that we can start shorting the Canadian dollar. That’s not quite ready to happen yet, but it is a longer-term thesis that I’ve been paying attention to. In the meantime, pay attention to the red 24-hour exponential moving average on the chart, because if we rally and fail there, it could be another signal to start selling. I believe this market is going to be extraordinarily volatile.
Written by FX Empire