The US dollar was initially stable against the Canadian dollar during the trading session on Friday, but as the GDP numbers came out from both countries, the Canadian GP was a bit stronger. This sent the market much lower, essentially continuing the downtrend that we have seen for some time. The 1.24 level underneath is massively supportive, and we have a significant uptrend line on the weekly chart that we will be testing soon. Because of this, I am a bit apprehensive to hang on to any position for a long period of time, but I recognize that the next couple of days could be very noisy as the trendline will catch the attention of many traders around the world. I believe that the next several sessions will be very important and volatile, so I would keep my positions very small, and would be very nimble.
Range bound trading
I believe that we are going to see range bound trading over the next couple of sessions, but a breakdown below the 1.24 level would change everything. In the meantime, I believe that the inverse relationship with the oil markets must be adhered to, so pay attention to that. If oil rolls over, we could get a wicked bounce in this pair that has been oversold for some time, but then again if oil markets continue to rally, that could be reason enough for this market to continue to the downside, and possibly even break down below the trendline that I have been paying attention to. If that happens, we have a significant move just waiting to happen. All things being equal though, we are oversold so a rally would be welcomed by even the sellers as markets can go in one direction forever.
Written by FX Empire