USD/CAD Forecast December 26, 2011, Technical Analysis

USD/CAD fell on Friday as the oil markets continued their climb. The $100 level still wasn’t broken to the upside in the Light Sweet Crude markets, so there wasn’t much in the way of momentum. This isn’t overly surprising though as the volume was undoubtedly light for the session.

The resulting candle for the session was a hammer, and we are currently in the middle of our support zone between the 1.03 and parity levels. The 1.02 area where this candle has formed has been supportive in the past, so this wasn’t a major surprise. With this in mind, we prefer to buy as the oil markets look a little overbought at this point, and this hammer has appeared. We are willing to buy on a break of the highs from the Friday session. We aren’t willing to sell until we get under the 0.99 level.