Beginning of the month, brings us few interesting movements on the market. One of the most promising one can be spotted on the USD/CAD. Here, we do see a full, legitimate, long-term buy signal. This is caused by both: fundamental and technical factors.
First, let us talk about the fundamentals. On Friday, we found out the GDP number for Canada. Not only it came worse than expectations but it also came below zero! That caused the money outflow from the Canada and gave the pair a bullish boost. In the meantime, we also had Donald Trump, who tried to talked down the USD. Market did not care and actually went against his words. Well, what can you do? Now, let’s talk about the technical analysis. First of all, the pair was and still is in the channel up formation, so an upswing is always more probable. Furthermore, we bounced from the lower line of this formation with an inverse head and shoulders pattern. That is a very strong bullish formation, which here is already active. Activation comes from the breakout of the neckline (red) and that happened on Friday.
Today, the price is challenging the highs from February. Chances for the breakout are much higher than for the bounce. My view on this pair is positive and in my opinion, the price should aim for the upper line of the channel up formation.
