- The US dollar has rallied a little bit during the early hours on Wednesday against its Northern neighbor, but the markets overall are fairly quiet.
- Because of this, the USD/CAD pair continues to be a market that I’m not looking for huge moves in, but it is worth noting that we had a nice 3 bar reversal during the 3 previous sessions.
- The question now is whether or not we can take out the top of the Friday candlestick from last week, which I think would be a very strong sign.
Technical Analysis
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The technical analysis for this pair is bearish over the last several months, but when you look at it in the term of a couple of years, it’s very bullish. Because of this we have to ask the question whether or not we are going to change the trend overall, or if this ends up being a nice pullback that traders can take advantage of. If that ends up being the case, then we will have to challenge the 1.40 level above which I think would be rather resistant, especially considering that the 50 Day EMA and the 200 Day EMA indicators are currently hanging around that region.
If we turn around a breakdown below the 1.37 level, in other words, breaking down below the bottom of the hammer from the Monday session, then it would be a very negative turn of events for the US dollar, and we probably will see the US dollar drop down to the 1.35 level in this market. Furthermore, we would probably see the US dollar fall against multiple other currencies as well, so I would look at this as a potential signal as to what to do around the rest of the Forex world. Remember, if you can get a grip on what’s going on with the US dollar, you generally get most things right.
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