The USD/CAD technical pattern looks quite volatile in the shorter cycles; however, based on the daily charts we can define a very clear price range in which the USD/CAD has been contained over the last few months. In the short term cycle, the 1.3000 psychological number has proven once again as a strong support and based on the stochastic indicator, which is making lower highs in momentum, we can expect a new retest of this big round number in the coming week.
Only a break above the 1.3254 resistance level, which is also the upper boundary of the daily range will invalidate the bearish case and open up the door for more strength. On the fundamental side, traders need to keep an eye on the BOC Governor Poloz, which is due to speak at the Western Washington University, in Washington DC on Tuesday. Friday we have Canada GDP figures which contracted to 0.6% growth in July, the annualized GDP rate has contracted at 1.6% down from 2.5%. Any soft reading can induce some bullish momentum on USD/CAD.
Price momentum in USDCAD is pointing up… that’s surely a bullish sign. With Stochastic also pointing up, that’s another confirmation of upward movement. However, a closer look at the Stochastic shows a bearish divergence forming and that does not give us much confidence that this upward movement will last. Sure – we might see this price moving up a little bit more but we do not think it will break resistance. Direction for this coming week… South!
USDCAD Weekly Forex Forecast – 24th to 30th Sept 2016 – BEARISH
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