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USD/CAD Daily Chart

USD/CAD Price Chart- Daily Timeframe

Technical Outlook: USDCAD rebounded just ahead of a key confluence support zone early this month with the rally now approaching key regions of interest for near-term resistance / short entries at 1.2416/20 & 1.2481-1.2504. Initial support now rests with the median-line parallel (red) currently ~1.23 with a close below the yearly low-day close at 1.2156 needed to validate resumption of the broader downtrend.

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USD/CAD 240min

USD/CAD Price Chart - 240min Timeframe

Notes:A closer look at price action highlights further highlights the 1.2416/20 resistance zone- a region defined by the 50% retracement of the August decline and the 61.8% extension of the 2016 decline. Note that the 2012 trendline support (daily chart) also converges on this region. A breach above this zone risks a run into the monthly open at 1.2481 backed closely by our broader bearish invalidation level at 1.2504- both levels of interest for short-entries.

Look for a break below the weekly opening-range lows at 1.2313 to validate the reversal with such a scenario targeting basic trendline support / 61.8% retracement at the 1.22-handle. Bottom line, although broader USD strength is a concern, from a trading standpoint, I’llbe on the lookout for exhaustion up here while below 1.25.

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USD/CAD IG Client Sentiment
  • A summary of IG Client Sentimentshows traders are net-long USDCAD- the ratio stands at +1.63 (62.0% of traders are long) – bearishreading
  • Retail has been net-long since Jun 7th; price has moved 8.4% lower since then
  • Long positions are 5.5% higher than yesterday and 9.4% lower from last week
  • Short positions are 7.1% higher than yesterday and 30.3% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDCAD prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USDCAD price trend may soon reverse higher despite the fact traders remain net-long.

See how shifts in USD/CAD retail positioning are impacting trend- Click here to learn more about sentiment!

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Relevant Data Releases

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Other Setups in Play

- Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com.