Canadian Dollar Price Outlook: USD/CAD Bulls Targeting Trend Extremes
Canadian Dollar Technical Price Outlook: USD/CAD Weekly Trade Levels
- Canadian Dollarupdated technical trade levels - Weekly Chart
- USD/CAD rally approaching upper-bounds of consolidation pattern– bulls at risk into 1.3392
- Check out our 2020 projections in our Free DailyFX USD Trading Forecasts
The Canadian Dollar continued its march lower against the US Dollar with USD/CAD poised to mark a fifth consecutive weekly advance. The rally keeps price within a broad consolidation pattern with the advance now approaching the upper-bounds of a multi-year formation and leaves the immediate long-bias vulnerable heading into resistance levels just higher. These are the updated targets and invalidation levels that matter on the USD/CAD weekly price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Loonie trade setup and more.
Canadian Dollar Price Chart – USD/CAD Weekly
Notes: In my last Canadian Dollar Weekly Price Outlook we noted that USD/CAD had rebounded off confluence support early in the year with, a close above 1.3140s needed to keep the focus higher in price. A gap higher into the Sunday-open the following week has fueled a rally of more than 1.2% with USD/CAD now testing the 50% retracement of the decline off the 2018/2019 high at 1.3308.
A critical resistance confluence is eyed just higher at 1.3370/92- a region defined by last year’s high-week close & the 61.8% retracement and converges on basic trendline resistance extending off the 2019 high. Looking for a reaction off one of these levels in the weeks ahead. Weekly open support rests at 1.3230 backed by 1.3184 with broader bullish invalidation at the 20149 low-week close 1.3058.
Bottom line: The USD/CAD rally is testing initial resistance targets and we’re on the lookout for possible topside exhaustion near-term heading into yearly slope resistance just higher. From a trading standpoint, a good spot to reduce long-exposure / raise protective stops on a test of these next two levels. Ultimately, we’re looking for a breakout of this broad consolidation structure which has continued to govern price for over a year – that said, price is now approaching the upper bounds of the formation. Keep in mind we get the release of both US Non-Farm Payrolls (NFP) and Canada Employment figures on Friday- stay nimble into the close of the week. Review my latest Canadian Dollar Price Outlook for a closer look at the near-term USD/CAD technical trade 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-short USD/CAD - the ratio stands at -4.90 (16.94% of traders are long) – bullish reading
- Long positions are7.54% lower than yesterday and 36.99% lower from last week
- Short positions are16.84% higher than yesterday and 76.17% 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 further net-short than yesterday & last week, and the combination of current positioning and recent changes gives us a stronger USD/CAD-bullish contrarian trading bias from a sentiment standpoint.
Previous Weekly Technical Charts
- Sterling (GBP/USD)
- Gold (XAU/USD)
- New Zealand Dollar (NZD/USD)
- US Dollar (DXY)
- Euro (EUR/USD)
- Australian Dollar (AUD/USD)
- Crude Oil (WTI)
- Japanese Yen (USD/JPY)
--- 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.