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USD/CAD Constructive Above 1.3070 Ahead of Canada Retail Sales

USD/CAD Constructive Above 1.3070 Ahead of Canada Retail Sales

2017-02-21 17:30:00
Michael Boutros, Strategist

Talking Points


USDCAD Daily Chart

Technical Outlook: USDCAD responded yet again to the June trendline support last week (5th time) with the rebound now eyeing near-term resistance targets. This trendline converges on the 2/16 reversal-day close at 1.3071 and keeps the near-term focus higher while above this confluence region. Key near-term resistance is seen just higher into the 1.32-handle.

USD/CAD 120min

USDCAD 120min Chart

Technical Outlook: A closer look at price action has the pair trading within the confines of a near-term ascending pitchfork formation with the lower parallel highlighting support at 1.3074- this region also converges on the weekly opening-range low & former trendline resistance extending off the December high and will serve as our near-term bullish invalidation level. Initial support is eyed at the weekly open at 1.3095.

Interim resistance now being tested at the 61.8% extension of the advance off the lows at 1.3160 with a breach here targeting topside objectives at 1.3209 & the 61.8% retracement at 1.3227. Watch crude here as prices test critical resistance with the rally vulnerable sub-55. From a trading standpoint, I’ll favor fading weakness while above the lower parallel targeting the median-line. Keep in mind we have Canada retail sales data on tap tomorrow morning and is likely to fuel added volatility in the CAD crosses.

  • A summary of the DailyFX Speculative Sentiment Index (SSI) shows traders are net-long USDCAD- the ratio stands at +1.29 (56% of traders are long)- weak bearish reading
  • Long positions are 2.5% lower than yesterday and 18.5% below levels seen last week
  • Short positions are 6.8% higher than yesterday and 12.0% above levels seen last week
  • Open interest is 1.3% higher than yesterday but still 3.8% below its monthly average
  • While the current SSI profile continues to point lower, it’s worth noting that the recent narrowing in the ratio (increase in short exposure / decrease in long positioning) on building open interest shows the retail crowd attempting to fade this rally and further highlight the risk for a push higher. Look for this dynamic to mature in the coming days with a flip to net-short needed to suggest that a more meaningful low is in place.

Relevant Data Releases

USD/CAD Constructive Above 1.3070 Ahead of Canada Retail Sales

Looking for trade ideas? Review DailyFX’s 2017 1Q Projections

Other Setups in Play:

---Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex contact him at or Click Here to be added to his email distribution list.

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