Canadian Dollar Price Outlook: USD/CAD Free-Fall Slows- Loonie Levels

2019-10-24 19:00:00 Michael Boutros

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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 price approaching near-term downtrend support- risk is lower sub-1.32
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The Canadian Dollar is attempting to mark a the third consecutive weekly advance against the US Dollar with USD/CAD off by more than 0.3% heading into the close of the week. The decline takes price into the first support hurdle with central bank rate decisions on tap from both the BoC and the FOMC next week. These are the updated targets and invalidation levels that matter on the USD/CAD price charts. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Sterling 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 latest Canadian Dollar Price Outlook we noted that USD/CAD was approaching key near-term support at, “1.3145/55– look for a bigger reaction. For now, we’ll favor fading weakness while below the monthly open targeting a test of key support.” A decisive break below the monthly opening-range in the following days has seen price drop more than 2% off the monthly highs with the decline now trading just above the next major support hurdle at the 38.2% retracement of the 2017 advance / yearly low-week close at 1.3050/58.

Resistance now back at 1.3145/55 with a break lower from here exposing more significant support confluence at 1.2971 – a region defined by the 78.6% retracement of the 2018 October advance and the 100% extension of the 2019 decline. Look for a bigger reaction there IF reached.

Canadian Dollar Price Chart – USD/CAD 120min

Notes: A closer look at Loonie price action shows USD/CAD trading within the confines of a near-term descending pitchfork formation with price currently trading just above the median-line / support at 1.3050. An embedded descending channel may be in play here and has price at the upper bounds in New York trade today. Resistance stands at the weekly open / opening-range highs at 1.3133/45 with near-term bearish invalidation now set to 1.3206.

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Bottom line: The USD/CAD breakdown is approaching the first main support hurdle here at 1.3050- threat of near-term downside exhaustion. From a trading standpoint a good spot to reduce short exposure / lower protectives stops. For now, the risk remains lower while with in this formation – look for downside exhaustion again on a stretch lower towards 1.2970 IF reached. Review my latest Canadian Dollar Weekly Outlook for a closer look at the longer-term USD/CAD technical trading levels.

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Canadian Dollar Trader Sentiment – USD/CAD Price Chart

A summary of IG Client Sentiment shows traders are net-long USD/CAD - the ratio stands at -2.00 (66.67% of traders are long) – weak bearish reading
Long positions are1.82% lower than yesterday and 61.31% higher from last week
Short positions are7.21% lower than yesterday and 10.30% lower from last week
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CAD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger USD/CAD-bearish contrarian 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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