Be cautious, but you should get a nice opportunity out of this chart in the next 24 hours or so.
- The US dollar has rallied ever so slightly against the Canadian dollar during trading on Wednesday, as we are sitting just above the 200-Day EMA.
- We are currently between that indicator and the 50-Day EMA, which typically means we are about to get a squeeze in one direction or another.
- This makes quite a bit of sense because we have the FOMC meeting late Wednesday, and that will have a major influence on where this market goes next.
Look Out for Trading Opportunities in the Next 24 Hours
If we were to break above the 50-Day EMA, and then by extension the top of the Tuesday candlestick, the US dollar should continue to see a lot of bullish pressure, perhaps sending this market toward the 1.37 level. The 1.37 level has been significant resistance previously, so I think it is worth paying close attention to it. Anything above there would have the US dollar screaming higher against the Canadian dollar, almost certainly sending it to the 1.40 level almost immediately.
On the other hand, if we break down below the 200-Day EMA, it opens up a move down to the 1.30 level underneath. That’s where we’d launched from previously and is what is known by ICT traders as a “fair value gap”, so there is a significant amount of the retail space that will be looking for that move that happen. The 1.30 level does make a certain amount of sense, especially if the crude oil market takes off but as I write this article, we need to be cautious about trying to front run the Federal Reserve, because they can say things that really shake the markets up at times.
I believe that we are about to see an explosive squeeze, and therefore we need to pay close attention to what the market does in the short term, because it could give us a huge move in one direction or the other. Keep in mind that oil does have a part to play as well, so if oil starts to take off, that will certainly put a lot of negativity in here, but it also works in the other direction as well. Be cautious, but you should get a nice opportunity out of this chart in the next 24 hours or so. If we do not move, quite frankly then we start paying close attention to the job number on Friday.
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