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USD/CAD Technical Analysis: Canadian Dollar at a Turning Point

USD/CAD Technical Analysis: Canadian Dollar at a Turning Point

Ilya Spivak, Head Strategist, APAC

USD/CAD TECHNICAL ANALYSIS – Talking POINTS

  • Break of Falling Wedge resistance hints USD/CAD uptrend is resuming
  • Evening Star candle setup, range resistance beckon further confirmation
  • Retail trader sentiment studies suggest that buyers have the upper hand

The Canadian Dollar may be setting up for the next stage in a long-term decline against its US cousin. USD/CAD broke through the upper boundary of a bullish Falling Wedge chart pattern, suggesting that over a year of consolidation has given way to resumption of the rise from September 2017 lows.

Confirmation is still needed however as prices rest squarely ahead of range resistance in the 1.3328-45 area. This barrier has capped upside progress for the better part of 6 months. A daily close above that would suggest buyers have reclaimed the initiative in earnest, broadly exposing the next major threshold at 1.3521.

USD/CAD Technical Analysis: Canadian Dollar at a Turning Point

USD/CAD daily chart created with TradingView

Zooming in a bit closer however, the appearance of a bearish Evening Star candlestick pattern at resistance warns that further gains may yet be aborted. This too requires further confirmation however, with a daily close below rising trendline support establishing the 2020 uptrend needed to neutralize upward pressure.

USD/CAD Technical Analysis: Canadian Dollar at a Turning Point

USD/CAD daily chart created with TradingView

USD/CAD TRADER SENTIMENT

Chart of US Dollar vs Canadian Dollar price, retail trader sentiment

Retail trader data shows 13.61% of traders are net-long with the ratio of traders short to long at 6.35 to 1. The number of traders net-long is 6.11% lower than yesterday and 12.89% lower from last week, while the number of traders net-short is 13.31% higher than yesterday and 48.00% higher from last week.

IG Client Sentiment(IGCS) is typically used as a contrarian indicator. That traders are net-short suggests USD/CAD may continue to rise.Traders are more net-short than yesterday and compared to last week. Taken together, current sentiment and recent changes hints at a stronger bullish trading bias.

See the full IGCS sentiment report here.

USD/CAD TRADING RESOURCES

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

To contact Ilya, use the comments section below or @IlyaSpivak on Twitter

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

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