Canadian Dollar Outlook: USD/CAD Rally Stalls Under Weekly Resistance
- USD/CAD recovery testing first major resistance hurdle- long-bias at risk sub-1.3252
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The Canadian Dollar is on the counter-offensive against US Dollar early in the week after USD/CAD responded to the first major resistance hurdle last week. These are the updated targets and invalidation levels that matter on the USD/CAD weekly chart. Review this week's Strategy Webinar for an in-depth breakdown of this Loonie price setup and more.
Canadian Dollar Chart – USD/CAD Weekly
Notes: In my last Canadian Dollar Weekly Price Outlook we noted that that the, “USD/CAD breakdown is testing the first major support target at 1.3052/58.” Price rebounded sharply off this threshold with a 1.6% rally taking USD/CAD into key Fibonacci resistance last week at the 61.8% retracement of the September decline at 1.3252. Loonie marked a weekly doji into the highs an the immediate focus is on a reaction off this level with the near-term advance at risk while below.
Initial support rests with the median-line of the modified descending pitchfork formation we’ve been tracking off the yearly highs- currently around ~1.3156/63. This region is also defined by the objective November open and the 50% retracement of the late-October advance and further highlights its technical significance. Critical support rests with the 38.2% retracement of the 2017 advance / low-week close at 1.3052/58. A topside breach from here exposes the 75% line near the 1.33-handle backed by key resistance at 1.3355/70.
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Bottom line: USD/CAD is responding to the first major resistance hurdle on this recovery and the focus is on a reaction off this mark. From at trading standpoint, the long-bias remains vulnerable while below 1.3252 – look for topside exhaustion near-term. We’ll asses weakness into the median-line IF reached for guidance. Review my latest Canadian Dollar Price Outlook for a closer look at the near-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 -1.84 (35.22% of traders are long) – bullish reading
- Long positions are 12.74% higher than yesterday and 8.46% lower from last week
- Short positions are12.58% higher than yesterday and 22.05% 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. 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 sentiment standpoint.
See how shifts in Loonie retail positioning are impacting trend- Learn more about sentiment!
Previous Weekly Technical Charts
- Australian Dollar (AUD/USD)
- Gold (XAU/USD)
- New Zealand Dollar (NZD/USD)
- Euro (EUR/USD)
- Japanese Yen (USD/JPY)
- Sterling (GBP/USD)
- Crude Oil (WTI)
--- Written by Michael Boutros, Technical 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.