- The US dollar has rallied quite nicely against the Canadian dollar in the early part of the session on Thursday but could not hang on to those gains at the crucial 1.37 barrier.
- It looks like that continues to be an area where traders are going to continue to be a little bit hesitant and that makes a certain amount of sense considering that we also have the 50-day EMA there and previous resistance that extends all the way to the 1.3750 level.
Because of this, I believe that you have a situation where traders are going to probably continue to press the issue, but whether or not they can actually break out is still an open question. If we were to break above the 1.3750 level, then I think that could open up the possibility of a much bigger move in this market.
Market Resistance and Target Levels
The 200-day EMA currently sits at the 1.3832 level, and I think that could be your next target. If we were to fall from here, we could see this market fall all the way back to the 1.3550 level and still simply be in the middle of consolidation that has been going on for a while.
It is not until we break down below the 1.35 level that I think you get any serious downward push. This pair does tend to be very noisy and choppy, and we are at the top of the current range, so it does make a certain amount of sense that we could see a bit of a pullback but longer term I also would point out that the interest rate differential still favors the US dollar.
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Christopher Lewis has been trading Forex and has over 20 years experience in financial markets. Chris has been a regular contributor to Daily Forex since the early days of the site. He writes about Forex for several online publications, including FX Empire, Investing.com, and his own site, aptly named The Trader Guy. Chris favours technical analysis methods to identify his trades and likes to trade equity indices and commodities as well as Forex. He favours a longer-term trading style, and his trades often last for days or weeks.
