The USD/CAD pair fell during the session on Tuesday, but as you can see the 1.06 level has offered support yet again. That area for me is rather significant, but it isn't the bottom of the support. I think that supportive action goes all the way down to the 1.05 level, and going forward, I will buy any type of supportive candle between here and there.
The nonfarm payroll number was slightly stronger than anticipated last week, but it wasn't enough to completely change the attitude of the markets. There is still concern as to whether or not the Federal Reserve can taper, although ultimately, I think they will have to sometime in spring of next year. Because of this, this market should offer buying opportunities going forward, but you have to keep in mind that we are in the middle of December now, and a lot of traders will simply walk away from their desks.
End of year profit taking.
I'm not sure exactly what's going on in this market, but it could be a little bit of a pullback due to end of year profit taking. After all, some managers will have been satisfied with this quick move over the last couple weeks, and just want to add that to the prophet statement for their clients. You have to keep in mind that and the little bit of profit from that move, can't help but make the managers look better to their clients.
A lot of larger firms out there will simply be flat of all of their positions at the end of the year, this is mainly because the liquidity in the markets makes trading Forex rather dangerous for large traders right around the holidays. Because of this, the moves can be a bit strange, but right now I still believe that the support level all the way down to the 1.05 level should continue to offer buoyancy to the market. On the other hand, if we managed to break higher from here, I would be just as comfortable going long and hanging onto the trade as being out of the market completely. I would not short this market and hang on through the holidays.
