The USDCAD pair initially rose during the course of the day on Friday, but turned right back around to form a bit of a shooting star. The shooting star completely contradicts the hammer that we formed during the Thursday session, and the fact that the 1.30 level is massively supportive, and also has an uptrend line near there, it makes sense that we will continue to see quite a bit of volatility.

If we break above the top of the shooting star, the market then goes much higher from here and reaches towards the 1.35 level. On the other hand, if we break down below the bottom of the hammer from the Thursday session, this pair could very well selloff at that point in time.

You have to remember that the Canadian dollar is highly influenced by the oil markets, and you have to pay attention to what they are going in order to get a good feel on where the Canadian dollar can go. If the oil markets rise, then this pair tends to fall as it favors the Canadian dollar. Of course, it works in the exact opposite direction as well, so if the oil markets start falling, and we break above the top of the shooting star for the Friday session on this chart, it makes quite a bit of sense that we will continue higher at that point in time.

The 1.30 level is of course one of the most important levels on the chart, especially from a longer-term perspective. This is why we got the shooting star forming immediately after a hammer tells us that this area is one that you have to pay quite a bit of attention to. It’s almost as if the market is trying to decide where to go next for the longer-term move. This will be one of our favorite currency pair soon, and we will jump on the bandwagon as soon as the market makes a significant and an impulsive move. Until then, we have to remain very vigilant and steadfast.

Editor’s Note: Equity investors/traders can use the CurrencyShares Canadian Dollar Trust (FXC, quote) ETF to take positions in the euro without a FOREX account.  The ETF looks to track the price of the Canadian Dollar (USDCAD), minus ETF fee. The fund seeks to reflect the price of the Canadian Dollar with the shares representing a cost-effective investment relative to investing in the FOREX market.

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