I won't claim to know what the BOC will do. However, looking at the chart...there is some technical levels coming into play as we enter this news release.
78.6% of the 2002-2007 downtrend comes in near 1.4650
4.236 extension of the July 2011 to October 2011 up trend comes in near 1.4575
Couple those levels with a retail sentiment reading ( SSI ) that is increasing due to shorts closing out their positions opens the door for a reaction to take place near current levels.
I will be watching retail sentiment live HERE and if the reading continues to increase may suggest a correction lower is coming. Ultimately, I am looking for a correction lower to buy a dip.
Naturally, oil prices play a large part in driving the value of the CAD. My colleague Tyler Yell has a Q1 Oil Forecast available with a free registration HERE. Since Canada is a heavy oil producer AND since the Mexican Peso is weakening substantially (Mexico is also a large oil producer), oil is coming in cheaper from Mexico which is also dragging on the CAD. So Canada is getting hit from a couple of different angles.
Good luck and happy trading!
1.3760-1.3980 is the price zone that the market begins to tip its hand if this was an outright reversal or if there is still bullish juice left in the tank. If prices respect this zone and try to bounce higher, that keeps the door open for another test at the high.
If prices pierce the zone without hesitating, then this is a bigger reversal. 1.3450 is the price level where upon breaking, we'll need to re-inspect the longer term charts.
The sentiment reading has blasted higher to -1.6 which suggests there is more room to run to the downside.