USD/CAD Forecast: USD Drifting Lower Against CAD
The US dollar rallied ever so slightly on Friday against the Canadian dollar but did give back quite a bit of the gains to form an inverted hammer. While it was a slightly positive candlestick, the reality is that we are probably going to go looking a little bit lower for some type of support that we can take advantage of.
If we break above the top of the Friday candlestick, then I think the market will probably go looking towards the 1.30 handle, which is my longer-term target. The 1.28 level looks to be a potential support level, so I am going to watch this over the next couple of days and see if we get a bit of a turnaround. If we do, then I am willing to get long again as well. That being said, the lack of liquidity over the next couple of days will make reading too much into the candlesticks a bit dangerous, so I will also use the oil markets as a proxy for what could happen next as well.
The market being able to break above the 1.30 level could kick off a longer-term “buy-and-hold” situation, but that something that would more than likely happen well after New Year’s Day. That is why I am using the candlestick for the session on Friday being broken to the upside as a starting point, but I would not put huge amounts of money into this market. That being said, if we do get that move and then eventually take out 1.30, then I would become aggressively long.
To the downside, if we take out the 50 day EMA, then I will start shorting and aiming towards the 1.24 level underneath. Needless to say, we would probably coincide with a rising oil market, but we do not necessarily have to. With that in mind, I have a couple of parameters that am paying close attention to and will be acting upon. The next couple of days will more than likely be more along the lines of observation, but if I do get that trade triggered, I would use a position that would be equal to 25% of my normal risk just due to the fact that the illiquid conditions can cause massive spikes sometimes.
If we break above the top of the Friday candlestick, then I think the market will probably go looking towards the 1.30 handle, which is my longer-term target. The 1.28 level looks to be a potential support level, so I am going to watch this over the next couple of days and see if we get a bit of a turnaround. If we do, then I am willing to get long again as well. That being said, the lack of liquidity over the next couple of days will make reading too much into the candlesticks a bit dangerous, so I will also use the oil markets as a proxy for what could happen next as well.
The market being able to break above the 1.30 level could kick off a longer-term “buy-and-hold” situation, but that something that would more than likely happen well after New Year’s Day. That is why I am using the candlestick for the session on Friday being broken to the upside as a starting point, but I would not put huge amounts of money into this market. That being said, if we do get that move and then eventually take out 1.30, then I would become aggressively long.
To the downside, if we take out the 50 day EMA, then I will start shorting and aiming towards the 1.24 level underneath. Needless to say, we would probably coincide with a rising oil market, but we do not necessarily have to. With that in mind, I have a couple of parameters that am paying close attention to and will be acting upon. The next couple of days will more than likely be more along the lines of observation, but if I do get that trade triggered, I would use a position that would be equal to 25% of my normal risk just due to the fact that the illiquid conditions can cause massive spikes sometimes.
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