In 2008 USD/CAD broke lose of $1.04, and rallied faster than a space shuttle with a third booster rocket to $1.30. Falling from orbit, dollar steadily slid back to test $1.04, and traders every where waited for the next shuttle launch, but it never came. Instead, supply and demand evened up, and USD/CAD has traded in a painful range between $1.08 and $1.04 for two quarters. Over the last four weeks however, dollar has popped out of $1.04 with some conviction, and now rests on a setup I like to call the “back nine”.

The back nine is simply a trend line test, following the breakout that caused a trend line to fail. It’s nothing fancy, but USD/CAD hasn’t shown anything with a long bias in several months so in my opinion the technical setup is significant.  Pulling Fibonacci ratios from the $1.30 high, to the $1.02 low a potential long term target for USD/CAD could be $1.13. For bargain hunters, this could be handy to keep in mind. If USD/CAD continues to move higher, and bargain days become available, the long term target could offer a good long trade. Anything could happen coming out of the holiday weekend in the United States tomorrow, but keep this long term picture in mind as you trade the price action over the coming weeks.

What do you think about USD/CAD? Do you think it has the fundamental strength to hold this demand level? Or are you still a bear? Share your comments with us below, I’d love to hear them.

Best of luck,

Ryan