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Regardless, this is a pair that is typically choppy, and I do think that continues to be the case going forward as not only is it influenced by oil, but is also influenced by cross-border trade between these 2 countries which is quite extensive, and therefore you should keep in mind that a lot of the transactions are done out of necessity.
- The USD/CAD rallied rather significantly during the trading session on Tuesday as we tried to break above the 50-Day EMA.
- We did for the briefest of moments, only to turn around and fall rather hard. By the end of the session, we ended up forming a rather ugly candlestick as we head into the FOMC meeting.
- This is interesting because we are also sitting on top of the 200-Day EMA, a technical indicator that will capture a lot of attention.
Looking at this chart, it does seem as if we are trying to form some type of massive descending triangle but will have to contend with the 200-Day EMA, and the 1.33 level, an area that has been very important more than once. Furthermore, we have to pay close attention to the oil market, because it has been very noisy, to say the least. Looking at this chart, it looks to me like we are trying to figure out whether or not oil is going to take off as well as global growth. If it does, that will do wonders for the Canadian dollar which is so highly leveraged energy.
Volatility Ahead
The shape of the candlestick is essentially an ugly shooting star and shows just as much selling pressure as there is. Looking at this chart, the market is likely to see a lot of volatility in this general vicinity as we are between the 50-Day EMA and the 200-Day EMA, typically an area where you see a big “squeeze” in the market. If we do break down below the 50-Day EMA and the 1.32 level, then I think it’s very likely that the market goes down to the 1.30 level.
On the other hand, if we take out the 50-Day EMA to the upside, then it’s possible that we are looking at the 1.37 area, an area that has been very important multiple times in the past. Regardless, this is a pair that is typically choppy, and I do think that continues to be the case going forward as not only is it influenced by oil, but is also influenced by cross-border trade between these 2 countries which is quite extensive, and therefore you should keep in mind that a lot of the transactions are done out of necessity.
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