The US dollar has rallied initially during trading on Thursday, reaching as high as 1.2950 during the early hours, but have pulled back just a little bit to test the 1.29 level. In general, this market is typically pushed by where the oil markets are going, so keep that in mind. If oil starts to fall that puts upward pressure on this pair as the Canadian dollar gets pounded. As you can see on the chart, I have a band of lavender underlying the candles on the chart, and this shows approximately where I think this market is going to trade over the next couple of sessions. While I do believe that eventually we could break out, it makes a significant amount of sense that we might see volatility as the market tries to break out to the upside. After all, the 1.30 level is not only psychologically important, but it is also structurally important in the past. I believe that it will take several attempts to finally break out, and that gives the market some time to think about things, and perhaps put money to work.
If we were to break down below the 1.28 handle, then I think the move reverses itself and we need to go lower to “reset.” I don’t have any interest in shorting this market right now, because I think that the oil markets are in trouble, and of course the Canadian economy is a bit shaky as a result.
Written by FX Empire