The Canadian dollar fell to an 11 year low against the greenback in a turbulent. Does it have more room to fall?
The team at Morgan Stanley sees further downside for the loonie – bullish Dollar/CAD:
Here is their view, courtesy of eFXnews:
Morgan Stanley picks USD/CAD as its technical FX chart of the week where MS is tactically and structurally bullish and maintains a buy-on-dips strategy. MS provides some insights on where traders should consider establishing this trade and placing their stops and targets accordingly.
On the 10-year USD/CAD Chart:
“longer-term picture for USDCAD is bullish and we recommend buying on any dips. Currently in a C wave, the structure has exceeded the previous A-wave top at 1.3065. The current C-wave is incomplete since we believe it is still in a 3 rd wave. Our longer-term bullish analysis is incorrect on a dip towards the low at 1.19. We target 1.45 by the end of next year,†MS projects.
On the 3-year USD/CAD Chart:
“USDCAD has large upside momentum as it is within a 3 rd wave of a larger 3rd wave. We would target 1.40 initially on trades initiated on dips. A move below the 1 st wave high at 1.2835 would suggest that the near-term momentum may have faded and so we would have to wait for a larger dip to buy,†MS argues.
On the 90-day USD/CAD Chart:
“We believe that USDCAD is in a sub-iiird wave that is incomplete. USDCAD has recently burst higher out of a triangular structure. Staying above the recent high of 1.3350 provides further upside momentum. On all three timescales shown in the charts, USDCAD remains within a third wave, a bullish signal. We would put stops for shortterm trades at the recent low of 1.30,†MS advises.
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