- The US dollar pulled back just a bit during the early part of the trading session on Friday but has turned around to show signs of life again.
- At the time of writing, we are testing the top of the shooting star from the Thursday session, and if we can break above there it would be a very bullish sign.
- That could open up the possibility of a move to the 50 Day EMA, near the 1.3840 level.
That being said, you need to keep in mind that the Canadian economy is starting to struggle a bit, and of course the US dollar is oversold around the world. The Canadian dollar is not buoyed by the oil markets against the US dollar, despite the fact that you will hear people talking about the oil markets and how the Canadian dollar should be strengthening. That is true against certain currencies, but the US produces about 12 million barrels of crude oil day, so that influence isn’t as strong as it once was in this particular pair.
Technical Analysis
The technical analysis for this market is still negative over the last several months, but over the last couple of years we have been very bullish. Furthermore, it’s worth noting that the massive candlestick from Tuesday shows a potential turnaround, and of course the 50 Day EMA looks like a nice target. If we can break above there, then we could send this market looking to the 1.39 level, possibly even the 1.3980 above, where the 200 Day EMA currently resides. Obviously, if we break above there then the trend changes completely.
I do believe that the market will continue to be very noisy, and I do recognize that we could be a potential support level based on longer-term consolidation a couple of years ago. The impulsive candlestick from that Tuesday session is something that I’m paying close attention to, as it tells me that there is at least some demand for the greenback.
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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.