Canadian Dollar Price Targets: USD/CAD Bulls Eye Key Resistance Pivot
- USD/CAD eyeing resistance near two-month highs- looking for a reaction at 1.3338/55
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The Canadian Dollar is down more than 2.4% against the US Dollar since the July lows in USD/CAD with price now approaching a key inflection zone just higher. These are the updated targets and invalidation levels that matter on the USD/CAD charts this week. Review this week's Strategy Webinar for an in-depth breakdown of this silver price setup and more.
Loonie Price Chart – USD/CAD Daily
Technical Outlook: In my last USD/CAD Weekly Trade Outlook we noted that price was approaching a key resistance zone, “at the 61.8% retracement of the May decline / 2019 high-week close at 1.3355/70 backed by the trendline confluence around ~1.3430s- a weekly close above this level would be needed to suggest a larger price reversal is underway.” USD/CAD has failed just ahead of this threshold early in the month with price trading in a near-term consolidation just below- note the building divergence / pending support trigger on the daily momentum profile.
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Loonie Price Chart – USD/CAD 240min
Notes: A closer look at Loonie price action sees USD/CAD trading within the confines of an ascending pitchfork formation extending off the July lows with the upslope further highlighting the 1.3338/55 resistance zone – looking for a pivot off this zone.
A topside breach / close above exposes the 75% parallel (currently ~1.3390s) backed by the 2017 open / 61.8% retracement at1.3435/37 - expect a larger reaction there IF reached. Weekly open support rests at 1.3270 backed by the sliding parallel just lower – weakness beyond this threshold would suggest a more significant near-term high is in place / a more significant correction is underway with such a scenario targeting the monthly open at 1.3191.
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Bottom line: USD/CAD is targeting uptrend resistance just higher and we’re looking for a reaction on a stretch into 1.3338/55. From a trading standpoint, a good level to reduce long-exposure / raise protective stops. Price is poised to mark an outside-day reversal into the highs if price continues course - often a warning sign of possible near-term exhaustion. Ultimately a topside breach / close above would be needed to mark resumption of the broader uptrend.
Loonie Trader Sentiment – USD/CAD Price Chart
- A summary of IG Client Sentiment shows traders are net-short USD/CAD - the ratio stands at -1.6 (38.4% of traders are long) – bullish reading
- Traders have remained net-short since July 23rd; price has moved 2.0% higher since then
- Long positions are 21.2% higher than yesterday and 5.4% lower from last week
- Short positions are 8.2% lower than yesterday and 5.9% higher 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. Yettraders 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 USD/CAD trading bias from a sentiment standpoint.
See how shifts in Silver retail positioning are impacting trend- Learn more about sentiment!
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- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.