USD/CAD Forecast December 23, 2016, Technical Analysis

The USD/CAD pair broke higher during the day on Thursday, testing the 1.35 level for resistance. We turned around at that level, so of course it looks as if we are going to struggle to break above their, the most certainly looks as if the buyers are starting to become a bit more aggressive. Longer-term, I still believe that the USD/CAD pair goes higher, but we may need a little bit of help in the oil markets in the form of selling to break above the last little bits of resistance here. A move above the 1.3550 level is reason enough to believe that the markets can continue to grind its way to the upside, just as a supportive candle below would be.
I believe that there is quite a bit of support somewhere near the 1.3350 level, and of course the massive uptrend line that has previously caused the balance yet again. Ultimately, I think we do go much higher, but in the meantime, we could have a little bit of volatility because this is the last trading session before the Christmas holiday, and then of course we have the New Year’s Day celebration after that. So, having said that, although I’m bullish I would recommend that patients be used, because quite frankly the move could take a couple of weeks to happen. Because of this, smaller positions may be utilized, only because it gives you an opportunity to hang onto trades taking longer than you may traditionally become trouble with.
Once we do break above the 1.3550 level, the market should then go to the 1.40 level above. Ultimately, this is a market that favors the US dollar, mainly because of the strength of the currency around the world. The Federal Reserve raising interest rates will of course continue to influence this pair, while the Bank of Canada is light years away from doing the same thing. Because of this, I think eventually the floodgates will open and we will continue to go higher but I also recognize that we are approaching a significant barrier. This will not be a move for the squeamish.