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
• Check out our 2019 projections in our Free DailyFX USD Trading Forecasts
• Join Michael for Live Weekly Strategy Webinars on Mondays at 12:30GMT

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.

New to Forex Trading? Get started with this Free Beginners Guide

Canadian Dollar Chart – USD/CAD Weekly

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

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.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

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)

Learn how to Trade with Confidence in our Free Trading Guide

--- Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex