USD/CAD Forecast October 2, 2017, Technical Analysis

The US dollar rallied against the Canadian dollar on Friday, as we continue to pound towards the 1.25 handle. This is an area that’s offered a significant amount of resistance though, so I think this market is going to continue to be noisy. When you look at this on the weekly chart, this is essentially where the weekly uptrend line was broken through, so we are retesting of vital area in this pair. Because of this, I expect a lot of noise, and therefore this is going to be a difficult market to trade over the next couple of sessions. However, once we get a break in one direction or the other with any type of impulsivity, that could lead us much higher or lower, and therefore it makes it a market that you should be paying attention to as you can set up a longer-term trade based upon shorter-term action.
A breakdown below the 1.2350 level has me selling and aiming for the 1.20 level, while a break above the 1.2550 level has me aiming for much higher levels. This is a market that has been influenced by the bond markets as of late, and of course always has the influence of oil markets as well. Remember, as oil goes higher, typically the Canadian dollar does as well as it is considered to be the proxy currency by worlds traders for petroleum. However, the dynamic has broken down a little bit over the last couple of years as the United States is starting to produce much more in the way of crude oil as well. Either way, I think that the next couple of days should be important, and therefore give us clarity on where to trade next. I would be patient about putting money to work.