The US dollar has initially fallen during the week but found enough support just above the 1.25 level to turn around and rallied again against the Loonie. This is a very bullish sign, as we found support before we got to the up-trending line that has been so important. By looking at this market, it looks likely that the US dollar will continue to go higher, and I find this interesting considering that the oil markets have been so bullish as of late. I think we are starting to see cracks in the Canadian economy, so perhaps we will focus less on petroleum and more on Canada.
I believe that the 1.2750 level will cause a bit of resistance, but more than likely we will go towards the 1.30 level after that. The uptrend line underneath continues to offer support from what I see, and we may be able to move the perceived “floor” in the market to the 1.25 handle soon. I believe in buying dips, and I believe that we are trying to hang on to what has been a strong move to the upside, even if we did sell off rather viciously a few months ago.
If we were to break down below the uptrend line, that could unwind this market to the 1.20 level rather quickly. However, I think the American dollar is starting to make a stand here, and therefore I prefer buying overselling, at least until that uptrend line is proven shattered.
