Potential signal:
I am a buyer of this pair, especially if we drift lower from here. The 50-Day EMA underneath could kick off a nice buying opportunity, with the stop loss just below at the 1.3578 level. The target would be 1.38 above.
- During the Friday session, the Canadian Employment Change numbers came out at 90,400 jobs added, much hotter than the anticipated 20,900 expected.
- The Unemployment Rate came in at 6.1%, instead of the 6.2% that was anticipated. This initially had the market racing toward the Canadian dollar as it was a much better than anticipated number.
- However, by the end of the day we had seen a complete turnaround, as the US dollar suddenly spiked from a crucial level.
By forming a massive hammer, this suggests that the market is going to turn around and show signs of life. This also suggests that we are eventually going to go looking toward the highs again, which is at roughly 1.3850 above. I think we can probably even see this market go higher than that, looking to reach the 1.39 level. That is the top of a huge consolidation area that we have been in for quite some time, and I think that is worth paying close attention to. On the downside, we could also see the 1.36 level as a support level.
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Canada Cannot Escape États-Unis
Canada cannot escape its southern neighbor, as the American economy is essentially what the Canadian economy lives off of. Anyone who has seen the massive crossings in either Buffalo or Detroit recognize just how much trade there is back and forth between these 2 economies. Essentially, the Canadian economy needs a strong US economy to thrive. If the consumer starts to buckle in America, Canada will most certainly feel the pain. It is because of this that this particular pair may move a little counterintuitively at times.
As things stand right now, this looks very much like a “buy on the dips” market, and therefore I think you’ve got a situation where you were just simply looking for “cheap US dollars” to take advantage of. This doesn’t mean that the market is going to be very bullish all of the sudden, just that it’s likely that we will continue to see this market be noisy but positive at the same time.
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