USD/CAD Forecast August 9, 2017, Technical Analysis

USD/CAD daily chart, August 09, 2017

The USD/CAD pair went sideways during most of the session on Tuesday, reaching towards the 1.27 level. However, it looks likely that the market is going to try to break out above there, and continue to go even higher. The Canadian housing bubble is beginning to pop, and I think that is going to cause a lot of trouble for the Bank of Canada. Recently, we have seen this pair turn around after a massive bond trade involving buying Canadian bonds and shorting American bonds started. However, even with stronger economic numbers coming out of Ottawa as of late, if the housing bubble in Toronto pops, this could cause major problems for the central bank. Transactions last month in the housing in the Greater Toronto Area were down 40%. It looks very likely that we are going to see this housing bubble start to cause major issues.

Ultimately, I buy dips.

Ultimately, I buy dips in this market but I recognize that there will be a significant amount of volatility going forward. This is a longer-term trade for me, as we have recently bounced from the uptrend line on the weekly chart. By bouncing from that uptrend line, I think that the longer-term uptrend is still intact, and that allows this market to go much higher. That doesn’t mean it’s come to be an easy tray to hang onto, and I look at this as more of an investment than anything else. Longer-term, I expect to see the 1.30 level given enough time, but it’s obviously going to take quite a while to get there. This is a longer term “buy-and-hold” market from what I see, but that doesn’t mean that we won’t dip from time to time. I look at those as offers of value.

Written by FX Empire