USD/CAD forecast for the week of May 30, 2016, Technical Analysis

The USD/CAD pair initially fell during the course of the week, but found enough support below the 1.30 level to form a hammer. The hammer of course is a very bullish sign at this point in time, if we can break above that hammer I believe that the market will continue to go higher. A break above the top the hammer coinciding with the oil markets falling should be a nice signal to start going long as well. Currently, the oil markets are at the $50 level, an area that has massive implications. If we pullback from there, this market will almost have to go higher in reaction. The market had recently been negative, but over the longer term looks as if the uptrend may very well still be intact.

If we can break above here, the next target will probably be the 1.35 level, and then eventually the 1.40 level. Keep in mind though that of course the oil markets will be heavily influential, and they have been rallying quite significantly lately. With that being the case expect quite a bit of volatility, as the market will continue to be influenced by not only the oil market, but the overall strength and weakness of the US dollar going forward as well. Remember, the Federal Reserve is still under the microscope as far as interest rates announcements are concerned, and that of course will influence what the greenback does in general.

This pullback has been rather sharp and steep, so at the very least I believe that a bounce makes a lot of sense at this point in time, and could simply just be corrective. A corrective bounce still can make quite a bit of money for it, so you have to keep in mind that a corrective bounce on a falling we seen recently could have this market going to at least the 1.35 level. Quite frankly, I’m not comfortable selling as we have seen such a significant fight just below. Pay attention to oil, and perhaps even the US Dollar Index along with this chart.