USD/CAD Forecast May 4, 2017, Technical Analysis

The USD/CAD pair fell during the session on Wednesday, showing signs of weakness. However, the 1.37 level offered enough support to turn things around and form a hammer. The hammer of course on the hourly chart is a bullish sign, and the 72-hour exponential moving average has offered support. A break above the 1.3740 level would send this market much higher, perhaps in a longer-term buy-and-hold type of scenario. Keep in mind that the oil markets are very vital when it comes to the Canadian dollar, and if the oil markets breakdown below the $47 level, the market could breakdown rather significantly. The market has been in a nice uptrend for some time, and I think that this recent move only shows just how much farther it must go. By breaking above the 1.36 handle, the market looks ready to move towards the 1.40 level longer term.
Buying on the dips in an uptrend
Looking at this chart, I can see quite a bit of support underneath, and therefore I have no interest in shorting. I believe that the oil markets will continue to struggle, and that should be a nice opportunity to take advantage of a clear uptrend. When was like this happen, they can be a bit of a grind, but they do tend to work out and reach towards large, round, psychologically significant numbers. That’s how I feel about this pair, that we are going to go looking for the 1.40 level above. If we can break above that, the market should then go to the 1.45 level. On top of that, there are concerns in the Canadian housing market now, and that of course will work against the Canadian dollar as well. I have no interest in shorting, and believe that every time we pull back, it offers value in the US dollar.
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