Dollar/CAD is trading around 1.27. While the pair is off the highs, the loonie does not really enjoy the recent rise in oil prices. What’s next? Here is the view from Bank of America Merrill Lynch.
Here is their view, courtesy of eFXnews:
Bank of America Merrill Lynch FX Strategy Research discusses USD/CAD outlook from a wave-analysis perspective, arguing the if an A-B-C correction is complete, the pair should see a rally towards 1.31-1.33 into Q1 2018 against wave (A) low around 1.2460.
“We think the wave structure of 5 waves up (12345) and 3 waves down (ABC) since the 2011 low is complete. We think the wave (C) decline ended at the 50% retracement with a head and shoulders bottom and a slight price vs RSI divergence.
The current bottom suggests spot will rally to retest the moving averages at 1.3165 and possibly the interior trend line at about 1.32-1.33 in 1Q18. A decline below the right shoulder would invalidate this view, which is about 1.2460 and wave (A) low,†BofAML argues.
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