USD/CAD Technical Analysis – January 28 2015

The USD/CAD pair fell during the course of the day on Tuesday, breaking the bottom of the hammer that informed on Monday. Technically, this means that the Monday candle has now become a “hanging man”, which of course is a very bearish sign. It doesn’t really matter though, because there is so much impulsivity below that I still believe that the buyers will win the day. I don’t want to sell this pair, I simply want to wait to see if we get some type of supportive candle below in order to pick up the US dollar on value.

Keep in mind that today is the FOMC meeting, and that of course means that we will more than likely see some volatility in the US dollar anyway. I think that there is massive amounts of support down at the 1.20 handle, and even if we fell that far, I think it would simply be a matter of retesting what was once massive resistance. I have no illusions about the 1.25 level being easily broken to the upside, and have even stated in the past that I believe it would take several attempts. I think that’s all we are seeing right now, the market backing up in order to pick up enough momentum to break through this wall.

We do not have the type of strength in the oil markets that could move the Canadian dollar to be a lot stronger than it has been, and you have to keep in mind that the Bank of Canada just cut interest rates in a surprise move last week. Because of that, the Canadian dollar will struggle to keep any gains thereby making this a market that should continue to go higher. I simply look at this as a chance to pick up the US dollar “on the cheap.”