Trading

Bounces from Critical Big Figure

 Looking at this chart, we have seen the market launch quite drastically to the upside, pull back a bit, find support at a big figure, and then continue the run higher. 

The USD/CAD bounced during the trading session on Wednesday against the Canadian dollar at the crucial 1.35 level. This does make a certain amount of sense, because obviously there is a lot of psychology around these big figures, and of course, the US dollar has been like a wrecking ball against almost everything.

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North of the border, the Canadian economy must deal with falling oil prices, although oil has recovered over the last couple of sessions. They also must deal with a housing bubble that starting to deflate, and a drag on the economy as a result. There is also inflation in Canada that is causing major issues, and quite frankly being a commodity currency is not a good thing now with the global economy slowing down. Looking at this chart, we have seen the market launch quite drastically to the upside, pull back a bit, find support at a big figure, and then continue the run higher. This is textbook stuff, and I do think that we will continue to see buyers on dips going forward.

Waiting for Buying Opportunities

  • The 1.38 level above is a significant resistance barrier, and if we can clear that level, I think it opens the possibility of a move to the 1.40 level.
  • Any breakdown from here could see a move below the 1.35 level signal a potential run down to the 50-Day EMA.
  • I don’t necessarily think that happens, but it is something that we need to keep in the back of our minds. I do like the idea of buying dips and picking up value, and I do not have any interest in shortening this market.

OPEC is anticipated to announce a 2-million-barrel production cut per day, and while that could drive oil markets higher, I think that the Canadian dollar will probably remain somewhat muted in reaction, due to the various other factors going on in Canada now. I personally do not like the idea of shorting the US dollar, so therefore I have an upward bias in this market, but I do recognize that we will not necessarily be green every day. Looking for value and taking advantage of it is the best way to go going forward and I think we continue to see plenty of opportunities.

USD/CAD

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