Canadian Dollar Price Outlook: USD/CAD Rally Stalls at Resistance

2019-10-07 18:30:00

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Canadian Dollar Price Chart – USD/CAD Daily
Canadian Dollar Price Chart – USD/CAD 120min
Canadian Dollar Trader Sentiment - USD/CAD Price Chart
Key US / Canada Data Releases
Active Trade Setups

USD/CAD breakout stalling at daily resistance– constructive above 1.3240
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The Canadian Dollar struggling to regain its footing against the US Dollar with USD/CAD trading just below near-term resistance into the start of the week. These are the updated targets and invalidation levels that matter on the USD/CAD charts. Review my latestWeekly Strategy Webinar for an in-depth breakdown of this Loonie price setup and more.

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Canadian Dollar Price Chart – USD/CAD Daily

Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview

Technical Outlook: In my previous Canadian Dollar Price Outlook we highlighted a key near-term resistance zone at 1.3284/88 while noting, “Expect acceleration IF price can break higher here with such a scenario exposing longer-term downtrend resistance near 1.3355.” A topside breach last week saw price register a high at 1.3348 before pulling back – is there more to go?

Initial support now rests back at the 61.8% retracement at 1.3288 with broader bullish invalidation at the September channel line / monthly open at 1.3240. A topside breach targets the 100% extension at 1.3382- looking for a bigger reaction there IF reached.

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Canadian Dollar Price Chart – USD/CAD 120min

Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview

Notes: A closer look at Loonie price action shows USD/CAD trading within the confines of an ascending pitchfork formation extending off the September / October lows. The 75% parallel caught resistance on Friday at with short-term descending channel guiding this decline and further highlighting near-term support at 1.3284/88- look for a reaction there.

A downside break would expose subsequent support objectives at 1.3266, the 1.618% extension at 1.3253 and 1.3240- both areas of interest for possible exhaustion IF reached. A topside breach of this channel still faces the September high-day close at 1.3335 with 1.3355 and 1.3382 still critical.

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Bottom line: USD/CAD is coming off uptrend resistance but remains constructive for now while within this formation. From a trading standpoint, we’ll favor fading weakness while above 1.3253 targeting a test of the upper parallels near 1.3382. Ultimately, the goal is to sell a higher-high here for a larger correction. Keep in mind we get Canada employment data on Friday. Review my latest Canadian Dollar Weekly Price Outlook for a deeper look into the longer-term USD/CAD technical trading levels.

Canadian Dollar Trader Sentiment - USD/CAD Price Chart

A summary of IG Client Sentiment shows traders are net-short USD/CAD - the ratio stands at -2.66 (27.3% of traders are long) – bullish reading
Traders have remained net-short since September 12th; price has moved 1.0% higher since then
Long positions are 12.6% higher than yesterday and 13.1% lower from last week
Short positions are 0.6% higher than yesterday and 19.1% 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. Yet 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 USD/CAD 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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