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The USD/CAD pair fell during the week, but got a little bit of a bounce on Friday at the 0.97 handle. Interestingly enough, we have broken through all resistance of the previous consolidation rectangle, but are currently testing it again from the bottom. Simply put, we think that the 0.98 handle must hold as resistance in order to continue to short this market.
With all the tension in the Middle East, it is not really hard to imagine the oil markets going higher which of course should help the value of the Canadian dollar. However, if we get above the 0.98 handle on a daily close, shorting this pair certainly will be the last thing on her mind. A break below the bottom of the hammer for the week so would have us selling hand over fist.