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Canadian Dollar Short-term Outlook: USD/CAD Rally Rams into Resistance

Canadian Dollar Short-term Outlook: USD/CAD Rally Rams into Resistance

Michael Boutros, Strategist

Canadian Dollar Technical Price Outlook: Short-term Trade Levels

  • Canadian Dollar updated technical trade levels – Daily & Intraday Charts
  • USD/CAD rally rejected at uptrend resistance- risk for bull-market correction
  • Resistance 1.3812/55, 1.3945/71 (key), 1.4098- Support 1.3632/51, 1.3502/12 (key), 1.3224/30

The US Dollar’s assault on the Canadian Dollar has stalled with USD/CAD responding to technical uptrend resistance. While the broader outlook remains weighted to the topside, the advance may be vulnerable here near-term and the focus is on a breakout of the October range for guidance. These are the updated targets and invalidation levels that matter on the USD/CAD technical price charts. Review my latest Strategy Webinar for an in-depth breakdown of this Loonie setup and more.

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Canadian Dollar Price Chart – USD/CAD Daily

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Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview

Technical Outlook: The Canadian Dollar is attempting to snap a two-month losing streak of more than 8% against the US Dollar. A rally of more than 3.5% off the October lows faltered for a second time on building momentum divergence last week at the upper parallel of this ascending pitchfork formation I’ve been tracking since last year. While the broader outlook remains constructive, the immediate advance may be vulnerable here and the threat rises for further topside exhaustion while below lateral resistance at 1.3812/55- a region defined by the 1.618% extension, the objective October monthly open and the April 2020 low.

Canadian Dollar Price Chart – USD/CAD 240min

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Notes: A closer look at Loonie price action shows USD/CAD trading within the confines of a newly identified descending pitchfork formation extending off the September / October highs. Initial support rests at the 1.3632/51 Fibonacci confluence with a break / close below the monthly opening-range low at 1.3502/15 needed to suggest a more significant correction may be underway towards the lower parallels / 1.3224/30. Ultimately, a breach / close above the 2020 April low-day close / March weekly reversal-close at 1.3945/71 is needed to mark a resumption of the broader uptrend with such a scenario exposing subsequent resistance objectives at 1.4098 and the 2020 high-0week close a 1.4336.

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Bottom line: USD/CAD has responded to technical resistance and the focus is on this pullback within the broader uptrend. From at trading standpoint, rallies should be limited to the weekly open (1.3870) IF price is heading lower on this stretch- look for a larger reaction on a test of the 1.35-handle with a breakout of the October range to offer further guidance here. Ultimately, a larger correction may offer more favorable opportunities closer to trend support with a breach above 1.3971 needed to fuel the next leg higher in price. Review my latest Canadian Dollar Weekly Price Outlook for a closer look at the longer-term USD/CAD technical trade levels.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Canadian Dollar Trader Sentiment – USD/CAD Price Chart

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  • A summary of IG Client Sentiment shows traders are net-short USD/CAD - the ratio stands at -1.28 (43.91% of traders are long) – typically weak bullish reading
  • Long positions are 17.96% higher than yesterday and 37.86% higher from last week
  • Short positions are 11.75% lower than yesterday and 29.49% lower from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/CAD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. From a sentiment standpoint, the recent changes in positioning warn that the current USD/CAD price trend may soon reverse lower despite the fact traders remain net-short.
USD/CAD Bullish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -2% 3% 0%
Weekly -9% -1% -5%
Learn how shifts in USD/CAD retail positioning impact trend
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US / Canada Economic Calendar

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Economic Calendar - latest economic developments and upcoming event risk

Active Technical Setups

- Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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