Potential signal:
- I am still bullish of this pair, and on a break of the 200 Day EMA, I am still buying with a stop at 1.38 and a target of 1.3990 area.
It’s been a pretty quiet trading session during Wednesday as the US dollar has gone both higher and lower against the Canadian dollar in a really tight range. It’s worth noting that we are sitting at the 200 day EMA indicator. And that of course offers a lot of technical noise. If we can break above the 200 day EMA, then it’s possible that we could go looking at the 1.40 level.
A pullback from here is very possible and that could open up a move down to the 1.38 level, possibly even the 50 day EMA, which sits just above the 1.3750 level. As long as we can stay above there, I think we’ve got a real shot at going higher given enough time.
No Trade Agreement Between Countries
It does make a certain amount of sense considering that the United States and Canada still do not have any type of trade agreement that hurts Canada in a much more outsized way than it hurts the United States. And ultimately this is a scenario where I think if there’s a lot of fear around the world anyway, then the US dollar becomes more attractive in normal conditions, let alone what’s going on right now. Short term pullbacks continue to be buying opportunities. I have no interest in shorting this market. And of course, the interest rate differential continues to favor the US dollar. Really at this point in time, until we make a fresh new low below the 1.3550 level, I just don’t really want to short. I do think that we will rally eventually, and we may actually end up rallying for quite some time. At this point, I think it is probably just a matter of time before we take off.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
