USD/CAD Monthly Fundamantal Forecast – October 2016

Like with GBPUSD, the monthly chart of USDCAD also presents a pretty picture for the bulls and it also speaks a thousand words. Unlike the monthly chart of EURUSD which shows a lot of congestion and ranging, the chart of USDCAD over the past 2 months shows a constant demand in the 1.2800 region.

Have a look at the attached chart and you will see that for the past 2 months, the price has dipped towards 1.2800 but has always bounced back strongly to finish above 1.3000. You will also see how, in 2009, this exact same region had been a region of strong resistance, a wall kind of resistance which was finally broken down in 2015. This year, price had gone as high as 1.47 and over the past 4 months, it has been mainly a correction of this bull run since last year and now we are at the region of broken resistance turned support.

The wicks of the last 2 months present a very bullish long term picture for this pair and for those who trade long term. This region must be the ideal region to go long in, provided you can afford a SL below 1.28. Trading with monthly charts requires a lot of patience and it may not be for all traders. It involves TP of atleast 500 pips and SL of the same size. So, unless you have that patience and deep pockets, it may not be ideal for you.

So, we have a bullish view of USDCAD and this is further strengthened by the view that USD will begin to stabilise and slowly rise in value as the Fed begins to hike rates. USDCAD will also be affected by the low oil prices this year which has slowly begun to take its toll on the Canadian economy, so much so that the Bank of Canada could be looking to cut its interest rates in the near future. So, the technicals and the fundamentals all point to a bullish view of USDCAD in the forthcoming months and it is upto the traders to exploit it in the best way possible.