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USD/CAD Forecast for the Week of Dec. 12th, 2011, Technical Analysis

By:
Christopher Lewis
Updated: Jan 1, 2011, 00:00 UTC

The USD/CAD pair has been a very volatile pair over the last several months as the markets continue to weigh the economies around the world and the growth

USD/CAD Forecast for the Week of Dec. 12th, 2011, Technical Analysis

The USD/CAD pair has been a very volatile pair over the last several months as the markets continue to weigh the economies around the world and the growth expectations. The oil markets are a big driver of this pair, and the oil markets are almost exclusively driven by economic activity. The pair has found massive support in the 1.01 area, and the support even runs down to the 0.99 level. The pair looks like it has broken out above the parity level recently, and the original fall from the 1.07 level crashed hard into the area. The resulting bounce didn’t quite make it as high, but the candle for the previous week has formed a hammer of sorts, and shows that the pair doesn’t want to give up the fight just yet.

Oil markets look very range bound at the moment, and this is part of the reason we are seeing such volatile yet nowhere moves in this pair. The world slowdown would have a massive effect on the consumption of oil, and this would serious dampen the demand for the Canadian dollar. It is because of this that we need to follow the strength of economies in such places as China. (After all, it is China that the trading world thinks is going to save the rest of us.) If we see serious degradation of global strength, this pair will continue to bounce higher.

For now, the 1.01 to 0.99 level seems to be massively supportive, and we are willing to buy from that area. The 1.07 above looks like it could be the first massive resistance point, so the market will more than likely find itself sitting between the two over the short run. With this in mind, we are buying this pair near the 1.01 level, and selling it when we get to 1.05 in the near-term. If we can get above the 1.07 level, this becomes a long-term buy and hold pair going forward. The pair is known for making large and sudden moves, so this could happen much quicker than many people think.

USD/CAD Forecast for the Week of Dec. 12th, 2011, Technical Analysis
USD/CAD Forecast for the Week of Dec. 12th, 2011, Technical Analysis

About the Author

Being FXEmpire’s analyst since the early days of the website, Chris has over 20 years of experience across various markets and assets – currencies, indices, and commodities. He is a proprietary trader as well trading institutional accounts.

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