The US dollar rallied against the Canadian dollar initially during the day on Monday, but found the area above the 1.27 level to be a bit too resistive. We formed a shooting star for the week from last week, that of course is a cell signal. Because of this, I think that the market is going to spend the next couple of sessions trying to grind lower. I don’t necessarily think that were going to break down rapidly, but I suspect that a moved to the 1.26 level is reasonable. We need to get past the 1.2650 level to make that move though, so expect a significant amount of volatility on the way down there.
However, this could happen:
If we break above the 1.2725 level, then I think the market goes looking for the highs again. That is most certainly the more difficult move though, as we have seen selling pressure jump into the market rather rapidly once Wall Street got on board. Because of this, I believe that we will continue to see bearish pressure in this market as most of the volume in this pair is done in North America anyway.
Written by FX Empire