The U.S. dollar has been very choppy as of late, especially in the last couple of weeks as we have seen the Federal Reserve turn its attitude completely around, looking at cutting rates in the month of July. That being said, it, of course, has worked against the value of the greenback in general. In this particular case, I am looking at the U.S. dollar against the Canadian dollar, which is typically a very choppy market anyway, because the two economies are so highly intertwined. Beyond that, the oil markets do tend to move the Canadian dollar, but over the last couple of years the Americans have actually become a net exporters of crude oil, so, therefore, these should both be thought of as petrocurrencies.
Approaching major support
It’s very possible that the next week or so should be crucial for the USD/CAD pair because we are approaching the psychologically important figure of 1.30 just below. Furthermore, we also have the uptrend line crossing in this general vicinity. There are at least two reasons to think that there is a significant amount of support underneath, however, we have seen the market press the issue more than once.
When you look at the candlesticks of the last three weeks, we have tried to rally but gave back all of those rallies to close either lower, or just subtly higher. This sets up a significant trade here in the next couple of candlesticks, and also sets up a perfect “binary trade.”
The potential trade going forward
The next potential trade should be relatively obvious based upon the last couple of candlesticks. If we get a daily close below the 1.30 level, it’s very likely that this market continues to go much lower. You can see on the weekly chart clearly how important this area is going to be. However, if we were to turn around and break above the candlesticks over the last three weeks, that would be a very bullish sign because it will show that the sellers have run out of momentum. With this in mind, this could be one of the more interesting markets to trade in the Forex world out there.
I suspect though, that if the U.S. dollar breaks below the 1.30 level significantly, it will be a huge “anti-U.S. dollar” move waiting to happen in not only this pair, but several other ones around the world.
