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Canadian Dollar Price Outlook: USD/CAD Rebound may be Short-lived

Canadian Dollar Price Outlook: USD/CAD Rebound may be Short-lived

2020-04-01 16:30:00
Michael Boutros, Strategist
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Canadian Dollar Technical Price Outlook: USD/CAD Weekly Trade Levels

  • Canadian Dollarupdated technical trade levels - Weekly Chart
  • USD/CAD breakout fails at uptrend resistance- risk for larger correction while below 1.4336
  • Broader focus remains constructive while above 1.36- key resistance 1.4565

The Canadian Dollar is off more than 1.5% against the US Dollar since the Sunday open with USD/CAD rebounding this week after a 5% drop from fresh multi-year highs. The rebound may be short-lived however with the risk mounting for a larger price correction off this stretch. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Loonie trade setup and more.

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Canadian Dollar Price Chart – USD/CAD Weekly

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

Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview

Notes: In my last Canadian Dollar Weekly Price Outlook we noted that USD/CAD had, “broken through multi-year uptrend extremes with the focus on upcoming resistance objectives just highera breach / weekly close above 1.4565is needed to fuel the next leg higher in price.” The rally registered a high just pips from the 2016 swing high at 1.4690 with USD/CAD closing well below key resistance at the 2016 high-close / 100% extension of the 2017 advance at 1.4534/65.

Look for initial resistance at the yearly high-week close at 1.4336 with a break / close below the median-line / weekly open / 38.2% retracement at 1.4014/16 risking a larger correction in price. Subsequent support objectives rest with the sliding parallel (red), currently around ~1.3890s, backed by 1.38012 and the 61.8% retracement / 2017 high-week close at 1.3610/47- both areas of interest for possible downside exhaustion IF reached.

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Bottom line: The USD/CAD breakout has stalled at major uptrend confluence resistance. From at trading standpoint, the risk remains for a deeper pullback in price while below the high-week close- ultimately a larger correction may offer more favorable entries towards uptrend support. For now, looking sideways to lower. I’ll publish an updated Canadian Dollar Price Outlook once we get further clarity on 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

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 -1.39 (41.93% of traders are long) – weak bullish reading
  • Long positions are29.69% lower than yesterday and 109.93% higher from last week
  • Short positions are2.38% lower than yesterday and 27.43% 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. 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.
USD/CAD BEARISH
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Change in Longs Shorts OI
Daily 1% 0% 1%
Weekly 20% -3% 9%
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Key US / Canada Data Releases

Key US / Canada Data Releases - USD/CAD Economic Calendar - Loonie Event Risk

Economic Calendar - latest economic developments and upcoming event risk.

Previous Weekly Technical Charts

--- 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.

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