- USD/CAD testing near-term confluence support- broader outlook bearish sub-1.3270
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The Canadian Dollar rallied more than 0.6% against the US Dollar this week with USD/CAD testing a key near-term support barrier on Friday. These are the updated targets and invalidation levels that matter on the USD/CAD price charts heading into next week. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this gold price setup and more.
Canadian Dollar Price Chart – USD/CAD Daily
Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview
Technical Outlook: The Canadian Dollar is approaching a key level with USD/CAD trading just above the 61.8% retracement of the July advance at 1.3155 with the median-line of the broader descending pitchfork formation resting just lower. A break / close below this zone is needed to mark resumption with such a scenario targeting the October low-day close at 1.3086. Monthly open resistance stands at 1.3270 with a close above the 75% parallel needed to shift the focus back to the long-side.
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 extending off the November highs. Note that the lower parallel rests just below the 61.8% retracement of the October advance at 1.3151 – a break sub-1.3134 would clear the way for a larger decline targeting the 100% extension at the 1.31-handle backed by 1.3086.
Initial resistance stands with the 25% parallel backed by 1.3210. We’ll reserve the 61.8% retracement of the decline at 1.3225 as our near-term bearish invalidation level- strength beyond this threshold would once again shift the focus toward the monthly open at 1.3270.
Bottom line: USD/CAD is testing slope support into the close of the week with the immediate short bias at risk while above 1.3134/51. From at trading standpoint, a good spot to reduce short-exposure / lower protective stops. We’ll be looking for exhaustion on a rebound heading into the median-line for possible entries. Review my latest Canadian Dollar Weekly Price Outlook for a closer look at the longer-term USD/CAD technical trading levels.
For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy
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 +1.08 (51.85% of traders are long) – neutral reading
- Long positions are6.13% lower than yesterday and 1.51% higher from last week
- Short positions are2.49% lower than yesterday and 18.91% 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 less net-long than yesterday but more net-long 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.
| Change in | Longs | Shorts | OI |
| Daily | 12% | -2% | 5% |
| Weekly | 25% | -13% | 3% |
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- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
