The USD/CAD pair shot straight up during the session on Friday, continuing the move higher that started early in January. Recently, we have seen this pair go sideways and do nothing, but the Friday session definitely showed that the momentum is with the US dollar.
Interestingly enough, the oil markets continued to look fairly healthy, but the Canadian dollar is suffering. This is mainly because only certain types of oil are going well, and as a result the Canadian dollar isn't necessarily and demand. This pair is very good at being sideways and treading water, but it looks like we are about to break out again as this pair tends to do.
The candle for the session close above the parity level, which of course is significant in and of itself. Also, I see the 1.0050 level is one of importance, extending perhaps as high as 1.01 as resistance. That was the most recent high, and as a result a move above that would be very bullish for the US dollar.
Breakout and retest
The 0.9950 level had recently been broken out of and over, with the move ending at the 1.01 handle. We have now come back to that level again, and it has proven itself to be supportive. This is classic breakout and retest technical analysis, and as a result it does look like a very bullish pattern. However, we are still below that high of 1.01 that I want to see broken in order to become one of the start buying. After all, the pair is in a downtrend on the long-term church, so of course we have to be a little bit more careful when buying.
Alternately, if we managed to break back down below the 0.99 handle I think that this pair would become extraordinarily bearish as it would show a false breakout. In the meantime though, there seems to be a strengthening US dollar around the markets anyways, so I do believe that we are about to see strength in this pair. One for example is the strength that we are starting to see in the US Dollar Index, which is showing that we could breakout to the upside. This of course should have a positive effect on this pair as well.