The USD/CAD pair fell slightly during a light volume holiday session on Monday. While the Europeans were trading for the session, the Americans were away for the Labor Day holiday. This pair gets most of its volume during the North American trading session, so it makes sense that the daily candle is so small in its range.
It should be noted that we are at the bottom of a massive consolidation area, and as such we think that a bounce could be coming. The 0.98 level looks very supportive and has been for well over a year. The last time this pair bounced, it went all the way to the 1.04 level, and this is where we think he could end up again. However, we need to see this area that we are in right now hold in order to get overly confident.
The risk to reward ratio is still fairly strong at this point in time, and we are more apt to buy a supportive candle in that general vicinity that we are trading at right now than to short this pair. If we do close below the 0.98 handle on a daily candle though, we are more than willing to start selling at that point.
Written by FX Empire