USD/CAD Forecast November 23, 2016, Technical Analysis

The USD/CAD pair initially fell on Tuesday, but turned around to form a nice-looking hammer. The hammer of course is a very bullish sign, and as a result if we break above the top of that hammer I believe it is a continuation of the bullish pressure that we’ve seen. The 1.34 level has offered quite a bit of support, and that makes quite a bit of sense as it was previously so resistive. Because of this, it should now be supportive and it makes sense that the market would bounce from here and reach towards the 1.35 handle above.
Keep in mind that the oil markets will move the Canadian dollar in general, and as a result the fact that we have the Crude Oil Inventory announcement coming out during the day, and this of course could move the market in one direction or another. Remember, as oil markets fall, the value the Canadian dollar tends to shrink as well. That could be reason enough for this market to turn bullish again, and grind much higher. I think that the market is going to reach towards the 1.40 level above, but there will be quite a bit of noise between here and there.
Even if we did break down below the bottom of the hammer, and more importantly the 1.34 level, I feel that the market has quite a bit of support at the 1.33 level, and most certainly the 1.32 handle. At this point, I believe that the market will only look at a pullback as potential “value” in this market, so I am looking at those moves as a reason to go long and not short anytime soon. I think that this market is one that is going to continue going higher in a long-term move, and therefore I believe that a lot of people were looking at this as a potential investment rather than just a short-term trade. It really comes down to what timeframe you want to trade, but ultimately, I believe that long is the only way you can go when it comes to this market.