(MENAFN- Daily Forex) The usd/cad currency pair has fallen a bit during the trading session on Tuesday, reaching down below the 1.37 level during the day. However, we are getting close to an area that should have a significant amount of“market memory” attached to it, so I believe at this point we probably continue to see a lot of back and forth. Pulling back made a certain amount of sense considering that we were testing a major resistance barrier, and therefore it makes quite a bit of sense that we had to pull back.
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The 50-day ema underneath is near the 1.35 level and should offer a significant amount of support as well. Ultimately, I think this is a market that will eventually find buyers, mainly due to the fact that there is so much uncertainty out there that the US dollar will eventually end up being a safety play for most people. The 1.38 level above is an area that a lot of people will be paying attention to, but this looks a lot like a market that still has plenty of momentum, and therefore you need to keep it in mind as a potential longer-term play.
Ultimately, I think the US dollar breaks above the Canadian dollar, despite the fact that we have seen a lot of negativity over the last couple of days. When you zoom out, you can really get an idea as to how far this market had run, so it does make sense that we had to pull back. Above the 1.38 level, then I think you open up the possibility of a move to the 1.40 level, but looking at historical charts, you can see that the 1.38 level is an area that is going to have a lot of resistance , so therefore I think it's going to take a lot of momentum to get above there. If we break down below the 50-Day EMA, the market could very well open up the possibility of a move down to the 1.340 level, an area that features the 200-Day EMA underneath, which of course is a trend defining indicator. Ultimately, I think buying dips will eventually pay off, but you may want to be a bit patient with your position sizing and waiting to see some type of signal to get long .
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