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The US dollar rallied against the Canadian dollar during the trading session on Friday, reaching towards the 1.29 level. This is an area that begins massive resistance to the 1.30 level above, which is a major breakout just waiting to happen. I think that the market breaking above 1.30 will take a lot of momentum, and therefore would not surprise me at all if we had to pull back several times. Ultimately, I think that a break above the 1.30 level will happen, but that is probably going to coincide nicely with a breakdown in the WTI market.
If we do break down below the 1.28 handle, at that point I think we probably reset closer to the 1.27 level. I have no interest in shorting this market, although I do recognize that there will probably be several pullbacks on short-term charts. Buying the dips continues to be the best way going forward, and I think it will continue to be the way that most professional traders are looking at this pair. I suspect that by the time we get through the summer, we will be well above 1.30, but obviously we have had a relentless march higher, and therefore we may need to collect more traders at lower levels to finally break these barriers.
I believe that there are a lot of concerns in the Canadian housing market as well, which will eventually become a major influence in this market. With the oversupply of crude oil coming out of the United States, I just don’t think this pair will break down anytime soon.
USD/CAD Video 05.03.18
This article was originally posted on FX Empire