The USD/CAD pair fell during the session on Thursday, finding the 1.10 level to be supportive enough to keep the market somewhat afloat. As we dropped below there, the buyer stepped in and push the value there, and formed a nice-looking hammer. With that, we believe that this market will continue to go higher, and on a break in the top of that hammer, we are buyers but do recognize that the market probably going to be a bit noisy between here and the 1.12 level. Selling at this point in time is not an option as we believe that the longer-term uptrend that we’ve seen over the course of the last year or so is about to continue. On top of that, one thing that would concern is about going long of the Canadian dollar is that although oil markets have been strong over the last couple of sessions, the Canadian dollar hasn’t. The kind of disparity in the currency markets is normally a bad sign of things to come. We believe that this pair does continue to hire, and that we will ultimately try to reach 1.12 level.
If we get about 1.12 level, we see nothing stopping this market on a longer-term basis from hitting the 1.15 level, which is still our longer-term target. On top of all of that, you have to keep in mind that the weekly candle from the last week was a hammer. That of course is very bullish sign, and that means of the markets probably going to continue to go higher as we reenter this previous consolidation area.
We believe that the move is going to be rather choppy, but at the end of the day this pair typically is. After all, both economies are interconnected with each other, and with that typically will get moves that shop around and then suddenly explode in one direction or the other. You see this a lot in the EUR/GBP pair as well, which of course has the same type of dichotomy that this pair has with both economies been so dependent on each other.