The US dollar has been extraordinarily volatile against the Canadian dollar during the trading day on Tuesday. Because of this, the market is likely to cause a lot of trouble for traders who can handle the volatility, but I think that longer-term we still have plenty of buying pressure underneath, as on the hourly chart we have formed a bit of a hammer where one could imagine a pseudo-trend line. Because of this, and the fact that it was at the 1.2750 level, I think we will continue to see buyers pick up the US dollar on dips, as oil of course will remain very volatile. We do get the Crude Oil Inventories announcement coming out during the day today, so it’s possible that we may see more volatility in this pair. However, I think that we probably won’t, mainly because of the things giving holiday coming up on Thursday, and the Americans being away for several days. Most of the volume in this pair is traded in North America, so obviously that is going to have a significant influence.
I believe that the market is going to go looking towards the 1.30 level above, which should be significant resistance, based upon psychological importance. We also have a certain amount of structural resistance there on longer-term charts, and I think that the market breaking above there would be a very significant signal to go long on a longer-term “buy-and-hold” trade. In the meantime, I like buying short-term pullbacks, as I think there is more than enough interest in this pair going higher. The 1.27 level underneath is supportive as well, and I think that will offer buying opportunities as well. This continues to be a market that I have no interest in shorting.
Written by FX Empire