News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Breaking news

UK to Announce Vaccine Passports and WFH Guidance in Move to Plan B

Canadian Dollar Price Outlook: USD/CAD Breakout Targets Trend Extreme

Canadian Dollar Price Outlook: USD/CAD Breakout Targets Trend Extreme

Michael Boutros, Strategist

Canadian Dollar Technical Price Outlook: Near-term Trade Levels

  • Canadian Dollar updated technical trade levels – Daily & Intraday Charts
  • USD/CAD breakout targeting multi-year downtrend resistance
  • Long-bias at risk heading into the 1.34-handle

The Canadian Dollar is back on the defensive against the US Dollar this week with a breakout in USD/CAD taking price back towards the October highs. While the near-term focus remains higher, the advance is now approaching multi-year down-trend resistance and the immediate advance may be vulnerable heading into the 1.34-handle. 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

Canadian Dollar Price Chart - USD/CAD Daily - Loonie Trade Outlook - Technical Forecast

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 decline was approaching the, “lower parallel, currently ~1.3210s with a break below 1.3174/85 ultimately needed to suggest a larger reversal is underway..” Price registered a low at 1.3202 last week before rebounding with a breach above key resistance today at 1.3330/36 fueling a gain of more than 0.2% ahead of the New York open.

The next key resistance zone is eyed at 1.3383/92- a region defined by the September swing high and the 61.8% retracement of the decline off the late-2018 high. Note that the upper parallel of the broad descending pitchfork formation we’ve been tracking and further highlights the technical significance of this level. A breach / close above is needed to validate a larger reversal in price with such a scenario exposing channel resistance (red) / the 2017 open at 1.3435.

Canadian Dollar Price Chart – USD/CAD 120min

Canadian Dollar Price Chart - USD/CAD 120min - Loonie Trade Outlook - Technical Forecast

Notes: A closer look at Loonie price action sees USD/CAD continuing to trade within the confines of an ascending channel extending off monthly lows. A break of the objective weekly opening-range highs keeps the focus higher in price with initial topside resistance objectives eyed at 1.3383/92- look for a reaction there If reached. Initial support rests at 1.3330 with near-term bullish invalidation now raised to 1.3307- weakness beyond this threshold would shift the focus back towards weekly open support at 1.3252 backed by the monthly open at 1.3236 and the uncovered close at 1.3221.

Bottom line: The USD/CAD breakout is approaching the first major resistance hurdle on this multi-week advance. From a trading standpoint, look to reduce long-exposure / raise protective stops on a test of the 1.3383/92 resistance zone - ultimately, we’re looking for a reaction / topside exhaustion there with the broader advance vulnerable heading into this resistance confluence. 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

Canadian Dollar Trader Sentiment - USD/CAD Price Chart - Loonie Trade Outlook - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-short USD/CAD - the ratio stands at –2.24 (30.82% of traders are long) – bullish reading
  • Long positions are1.50% lower than yesterday and 13.91% higher from last week
  • Short positions are6.52% lower than yesterday and 27.68% 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 less net-short than yesterday & compared with last week and the recent changes in sentiment warn that the current USD/CAD price trend may soon reverse lower despite the fact traders remain net-short.

---

Key US / Canada Data Releases

USD/CAD Economic Calendar - Loonie Event Risk - Trade Outlook

Economic Calendar - latest economic developments and upcoming event risk.

Active Trade Setups

- 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.

DISCLOSURES