USD/CAD Technical Analysis – February 17 2015

The USD/CAD pair rose slightly during the session on Monday, as the 1.24 level continues to offer a significant amount of support. Ultimately, you have to keep in mind that the Monday session would have been a bit quiet, simply because most of the liquidity in this pair is found during the North American trading hours. Keep in mind that the Americans were celebrating Presidents’ Day, so there would have been a real lack of interest.

Also, you have to keep in mind that the oil markets have been very weak, and it’s only a matter of time before that weakness gets transferred over to the Canadian dollar and its value. If we can break above the top of the 1.25 level, I feel that the market should then go to the 1.27 level at least. I think that we are essentially trying to build up enough momentum to break out to the upside, and test what is without a doubt the most resistive level on the chart, the 1.30 level.

That area was where the pair stopped at the height of the financial crisis, and banged up against it several times. Ultimately, it could not break above there and therefore fell significantly. I don’t know if we can get above there, but I do know that we’re going to try to do it. We will need to build up a massive amount of momentum in order to do so, and when we do it will be the end of the Canadian dollar, so to speak. That will start a longer-term buy-and-hold type of situation, and could have this market one that’s very easy to trade.

Even if we pullback from here, I think that there is a massive amount of support down at the 1.20 handle, which extends all the way down to the 1.18 level. Ultimately, that area should have plenty of support based upon the fact that it is a bit of a “zone”, and as a result this should be an excellent buying opportunity if we get down there as well.