USD/CAD Price Analysis: Canadian Dollar on the Offensive

2018-06-28 17:01:00 Michael Boutros

What's on this page

USD/CAD Daily Price Chart
USD/CAD 240min Price Chart
USD/CAD IG Client Positioning
Relevant USD/CAD Data Releases
Other Setups in Play

USD/CAD rally fails at confluence resistance; threat for larger correction sub-1.3341
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The Canadian Dollar looks poised for further gains with USD/CAD looking vulnerable here after rallying nearly 11% off the September low. Ultimately, the pullback should offer more favorable long-entries as price continues to trade within the confines of a broad ascending technical formation. These are the updated intraday targets & invalidations levels that matter for USD/CAD heading into the close of the June trade. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

USD/CAD Daily Price Chart

Technical Outlook: In last week’s Technical Perspective on the USD/CAD, we highlighted a breach above confluence resistance at 1.3100 (also the objective monthly opening-range) with our broader focus weighted to the topside in price. The rally extended into the 50% retracement of the 2016 decline at 1.3376 with price failing a second attempt yesterday on building momentum divergence. Note that the 61.8% line of the ascending pitchfork formation extending off the yearly lows also converges on this region into the close of the week/month.

The immediate threat is lower against the high-day close at 1.3341 with a break below former slope resistance (blue) at ~1.3240 shifting the focus back towards the median-line at 1.3165 and a more significant Fibonacci support confluence at 1.3100/32- both areas of interest for possible exhaustion / long-entries IF reached.

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USD/CAD 240min Price Chart

Notes: A closer look at Canadian Dollar price action shows the rejection of the 1.3376 resistance barrier with USD/CAD now attempting to break below the weekly opening-range lows. It’s too early to rely on this near-term slope, but the upper parallel further highlights resistance at the high-day close.

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Bottom line: I’m willing to look lower while below the high-day close at 1.3341 targeting the median-line ~1.3165. Keep in mind tomorrow is the close of the week, month and quarter – not traditionally a good time for near-term positioning. That said, look for a defense of this high heading into the start of the month with a break below 1.31- needed suggest a larger reversal is underway. A topside breach/close above 1.3376 puts the broader long-bias back in-play with such a scenario targeting subsequent resistance objectives at 1.3435 and 1.3535. Join me on Friday for the return of my Foundations of Technical Analysis webinar series to review this setup and more!

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USD/CAD IG Client Positioning

A summary of IG Client Sentiment shows traders are net-short the USD/CAD- the ratio stands at -2.84 (26.0% of traders are long) – bullishreading
Traders have remained net-short since May 22nd; price has moved 3.5% higher since then
Long positions are 13.3% higher than yesterday and 4.4% lower from last week
Short positions are12.8% lower than yesterday and 5.3% higher from last week
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USDCAD prices may continue to rise. Retail traders are less net-short than yesterday but more net-short from last week and the combination of current positioning and recent changes gives us a further mixed USDCAD trading bias from a sentiment standpoint.

See how shifts in USD/CAD retail positioning are impacting trend- Learn more about sentiment!

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