Canadian Dollar Forecast to Break to Highs
USDCAD – Trading crowds have turned strongly net-long the US Dollar against the Canadian Dollar, giving us contrarian signal that the pair could continue trading lower. In fact traders have been steadily net-long since the pair crossed below the C$1.0400 mark, and we see little reason to change our bearish bias.
It’s important to note that the USDCAD continues to bounce near the psychologically significant C$0.9900. Yet our SSI shows that traders continue to buy as longs outnumber shorts by a significant 2.65 to 1. We often see that such one-sided pressure comes before the eventual break of important support. Obviously past performance is not indicative of future results, but this author likes the odds of a USDCAD breakdown on broader US Dollar weakness.
How do we interpret the SSI? Watch an FXCM Expo Presentation that explains the SSI.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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