Canadian Dollar Outlook: USD/CAD Breakout Imminent– Loonie Levels
- USD/CAD sets weekly opening-range just above November swing lows- risk is lower sub-1.32
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The Canadian Dollar is up more than 0.3% against the US Dollar since the start of the week with USD/CAD carving a well-defined range just above the November lows. 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
Technical Outlook: In my latest Canadian Dollar Price Outlook we noted that USD/CAD was, “testing slope support into the close of the week with the immediate short bias at risk while above 1.3134/51.” Price rebounded off this zone on Friday before failing at the 1.32-handle with price setting the weekly opening-range just above the November swing lows at 1.3115. The pivot below the median-line would leave the risk lower IF price closes at these levels with downside support targets stacked just lower- note that momentum has now fallen to levels not seen since the October decline.
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 with the December trendline (red) capping each rebound since the start of the month. Weekly open resistance stands at 1.3172 with near-term bearish invalidation now lowered to the median-line / Friday’s high at 1.3204.
A break lower from here exposes subsequent support objectives at the 1000% extension at 1.3101, the October low-day close at 1.3087 and the 38.2% retracement of the 2017 advance at 1.3050- look for a larger reaction there IF reached.
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Bottom line: USD/CAD has set a well-defined weekly opening-range just above the November lows and we’re looking for the break for guidance. From a trading standpoint, the risk remains lower while below the weekly open with a break below 1.3086 needed to fuel the next lower in price. 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 +1.12 (52.93% of traders are long) – neutral reading
- Long positions are16.95% lower than yesterday and 41.67% higher from last week
- Short positions are11.68% lower than yesterday and 30.54% 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. The combination of current positioning and recent changes gives us a further mixed USD/CAD trading bias from a sentiment standpoint.
Key US / Canada Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
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- Written by Michael Boutros, 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.