Canadian Dollar Technical Price Outlook: Near-term Trade Levels
- Canadian Dollar updated technical trade levels – Daily & Intraday Charts
- USD/CAD price reversal eyeing confluence support zone
- Near-term risk is lower sub-1.3278- key support 1.3174/85
The Canadian Dollar is on the counteroffensive against the US Dollar after reversing off key resistance last week with USD/CAD falling more than 0.8% off the monthly highs. While the near-term risk remains weighted to the downside, the decline is now approaching broader uptrend support and we’re looking for a reaction just lower. These are the updated targets and invalidation levels that matter on the USD/CAD price charts. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Loonie trade setup and more.
Canadian Dollar Price Chart – USD/CAD Daily
Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview
Technical Outlook: In my last Canadian Dollar Price Outlook we noted that the USD/CAD rally was, “now eyeing confluence resistance at 1.3330/36- a region defined by the September high-day close at and the 61.8% retracement of the May decline. The focus is on a reaction off this threshold with the immediate long-bias vulnerable while below.” Price registered a high at 1.3329 last week before reversing with the sell-off now attempting to break below monthly open support at 1.3236- a close below this threshold exposes confluence support at the 38.2% retracement / 100% extension at 1.3174/85; looking for a reaction there IF reached.
Canadian Dollar Price Chart – USD/CAD 120min
Notes: A closer look at Loonie price action sees USD/CAD continuing to trade within the confines of a descending pitchfork formation extending off February highs with price testing fresh monthly lows today in New York trade. Initial support rests with the lower parallel, currently ~1.3210s with a break below 1.3174/85 ultimately needed to suggest a larger reversal is underway targeting subsequent support objectives at 1.3141 and 1.3096-1.3102. Weekly open resistance stands at 1.3245 with near-term bearish invalidation set to the weekly opening-range highs at 1.3278.
Bottom line: USD/CAD is attempting to break monthly opening-range and leaves the risk lower for now while within this formation. From a trading standpoint, look to reduce short-exposure / lower protective stops on a test of key support / the lower parallel – an area of interest for possible downside exhaustion. Review my latest Canadian Dollar Weekly Price Outlook for a closer look at the longer-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 –3.42 (22.62% of traders are long) – bullish reading
- Long positions are3.08% lower than yesterday and 44.00% higher from last week
- Short positions are1.49% lower than yesterday and 24.72% lower 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. Yet traders are more net-short than yesterday but less net-short 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 | -6% | 2% | -1% |
| Weekly | 31% | -20% | -4% |
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- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
