USD/CAD forecast for the week of May 23, 2016, Technical Analysis

The USD/CAD pair initially fell during the course of the week but found enough buying pressure underneath the 1.30 level to continue going higher, and as a result it looks as if the market looks like it’s going to go higher. The 1.32 level above is the resistance barrier that we need to overcome in order to go higher from a longer-term perspective. Looking at the candle for the week, we believe that this market should continue to go higher. If we can get above the 1.32 level, the market should then grind all the way back towards the highs. There is a lot of noise between here and there, and of course the Canadian dollar is massively influenced by the oil markets, which of course has been very volatile as of late.

Looking at the chart though, it does appear that we are going to see a bit of a pullback in the value the Canadian dollar, so having said that we could get a bit of a move higher. Again, above the 1.32 level we should see quite a bit of bullish pressure, but I do believe that various levels along the way could cause pullbacks. I also believe the pullbacks will be thought of as value in the US dollar, and as a result it’s likely that people will be very interested once we do get the breakout. You have to keep in mind that the hammer that form during the previous week at the 1.30 level was a very bullish sign, but of course there is quite a bit of volatility in this area.

If we did manage break below the bottom of the hammer from the previous week, that would be a very negative sign, but I would prefer to see that coordinated with higher oil prices to start shorting again. Ultimately, the could go as high as the 1.45 handle again, but it is going to take quite a bit of time to get to that area as the volatility will make this an interesting play.