The USD/CAD pair went back and forth during the session, initially falling on Tuesday but found enough support to form a hammer. This hammer is preceded by two shooting stars, so looks like the market is ready to continue its tight consolidation at the current area. With that being said, we feel this market is essentially going to be stuck between the 1.01 level on the downside, and the 1.02 level on the upside. That being the case, this market will simply just grind sideways and be very difficult to trade. However, if we get a daily close well below the 1.01 level, we could start to see a significant selloff. Alternately, if we managed to clear the shooting star from last week that extends all the way to the 1.0250 area, this market could continue much higher. Until one of the two scenarios happen, we are on the sidelines.
Written by FX Empire