The USD/CAD pair fell during the session as you can see on Monday, but found enough support just below the 1.03 handle in order to form a hammer. We feel this area is rather supportive, and therefore a break above the highs from the session would be enough to have a start buying again. However, we do not think that this market goes much farther than 1.04 at first, so this could be a bit of a fight.
Remember the oil markets took a little bit of it being late in the day so we could see the Canadian dollar several overall. Going forward though, we think that the market will eventually break the 1.04 handle, and then head towards the 1.06 handle. This is just a continuation of the consolidation that we’ve seen for some time now, and because of that we look at this is a nice short-term play. We also have to keep aware the fact that the Federal Reserve is in fact going something about tapering or not soon, because of that, the headlines will of course move the markets.
We still think that selling is going to be difficult, even though we formed a hammer which can often be a great sell signal to break the bottom of it. Going forward from their though, we think that we did managed to break the bottom of that we could see as low as 1.02 in the short term.
If we do manage to break down though, we are much less comfortable selling as we think it makes more sense to consolidate at this point considering that the Federal Reserve is not made any actual decisions. We know that the Forex markets are focusing on that almost solely, so would make sense to see that be the driver or possibly not, and therefore any trading decision between now and then just isn’t a longer-term type of set up that we have at the moment, but that’s okay because the markets really haven’t given a whole lot of big moves lately.
Written by FX Empire