The USD/CAD pair initially fell during the session on Thursday, but as you can see found enough support below in order to turn things back around and form a hammer. That hammer of course suggests that the market is in fact going to continue going higher given enough time, and ultimately we should see the market try to break out above the 1.08 level. That area is a bit of resistance, but ultimately I feel that this market will break much higher, probably heading to at least the 1.0950 level.
Ultimately though, I think that this market will have quite a bit of buying pressure underneath, especially considering that we have such a significant uptrend line just below. That uptrend line of course is very important for the longer term uptrend that we’ve seen over the last several months, and as a result the area needs to be broken to the downside before I even consider selling, and then on top of that we have support at the 1.06 level as well. Ultimately, breaking down below there would make me very bearish of this market and believe that the market is going down to the parity level, but I really don’t see that happening.
Several hammers tell me there is underlined strength.
The last several candles have been either hammers or neutral candle, and as a result I feel that this market has plenty of support just below, and as a result every time it falls I think that the short-term traders will come into play and push the US dollar higher. I’ve also believe that this market typically is very choppy, so it doesn’t surprise me that we might go sideways in the short-term, ultimately breaking above the 1.08 handle on a fairly impulsive candle. That’s the typical attitude of this pair, especially considering that the two economies are so intertwined. With the United States producing much more of its own energy these days, oil has a lot less of an influence than it once did in this market. All things equal, I expect to see the 1.10 level by the end of the summer.