The US dollar initially fell against the Canadian dollar, dropping below the 1.27 handle again, but we found plenty of support below, and shot through the 1.27 level without much trouble afterwards. We are starting to see a little bit of a push back, but it looks as if the markets are ready to continue to go higher, and I believe that the 1.27 level will continue to be an area of contention and support. If we are to break down significantly, we need to clear the 1.2650 level to feel confident of a move to the 1.25 handle underneath. In general, I believe that the market is trying to break out to the upside in a clearance of the 1.2750 level would be a “W pattern” on the hourly chart being completed, and should send this market much higher. In fact, at that point I would expect the market would go looking towards the 1.30 level after that, as it is a large, round, psychologically important number, and of course a very juicy target for the bullish.
I do believe that if we break down, the 1.25 level will offer plenty of support, and I think at this point will offer a bit of a “floor” in the market. I also believe that the oil markets will continue to be the main driver of this market, and if oil roles over significantly, and I think it could some time relatively soon as show producers are jumping back into the marketplace, that should send this market higher as well. Again though, I’m a buyer but 1.2750, and a seller below 1.2650. In the meantime, I suspect that we are going to see a lot of noise in this general vicinity as we sort things out.
Written by FX Empire