- The USD/CAD currency pair has rallied significantly during the trading session on Friday, as a jobs number came out much hotter than anticipated.
- The Bureau of Labor Statistics stated that the United States added 518,000 jobs in the month of January.
- This was much more aggressive than the 188,000 jobs anticipated to be reported.
USD/CAD Up and Down Trading Scenarios
When you look at this chart, you can see that the 50-Day EMA sits just above, and it does offer a significant amount of resistance. If we can break above the 50-Day EMA, then the market is likely to go looking to the 1.37 level, an area that has been significant resistance previously. The 1.37 level is an area that has been important multiple times, so I think at this point in time we would have to see a huge effort to get above there. If we can break above there, then the market is likely to looking toward the 1.40 level above.
Underneath, the 1.33 level underneath has been support, and if we break down below the 1.32 level, then it’s likely that the market then goes down to the 1.30 level underneath, where I have a yellow line drawn on the chart. It is worth noting that we have bounce from the 200-Day EMA, but we also have that 50-Day EMA above, essentially squeezing this market. Typically, when a market moves between these 2 moving averages, it’s only a matter of time before we get some type of impulsive candlestick. It is worth noting that the US dollar was much stronger than most other currencies during the day, but the Canadian dollar did hold itself somewhat well during the session.
This pair will more likely than not be very choppy, and therefore you will have to wait to see some type of impulsive candlestick to break out of these moving averages. Ultimately, you then could start to add to a position once you are proven correct. With this. I think you got a situation where the market will then make its move. You could make an argument that we are in the midst of forming a bit of a double bottom, but it’s a little early to say that. However, the Forex markets in general are starting a fire off potential double tops and bottoms with the US dollar.
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