USD/CAD forecast for the week of September 4, 2017, Technical Analysis

The US dollar initially rallied against the Canadian dollar during the week, bouncing from the uptrend line that has been so prominent in this market. However, we have turned around to show signs of extreme weakness in this pair, as the Canadian GDP numbers came out much stronger than anticipated. Because of this, we had formed a shooting star right at the trendline, and just below it. I believe that a breakdown below the bottom of the weekly candle sends this market to much lower levels, perhaps the 1.20 level over the longer term. I have no interest in buying this market until we clear the top of the weekly candle, which seems to be very unlikely. If we did, that would be an extraordinarily strong signal. However, I think that the sellers will more than likely jump into this market, and that will be especially true if the oil markets show signs of life again.

Selling the breakdown

Selling the breakdown is preferable, as the momentum is most certainly to the downside. Ultimately, this market should continue to be volatile, but I think could give us plenty of opportunities. The 1.20 level underneath will be the first major support level, but if we break down below there, we could begin a significant freefall. If we did somehow rally above the top of the weekly candle, then I think the 1.30 level comes into focus. Keep in mind that the early part of the week is a holiday as Monday is Labor Day, so we probably won’t get a pronounced moved until Tuesday. I currently favor the downside, as the bond traders have been focusing on Canadian bonds with the expected interest rate high coming out of Canada.

USD/CAD Video 04.9.17