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.

Free Trading Guides
EUR/USD
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Bullish
Gold
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Mixed
More View more
Notice

DailyFX PLUS Content Now Available Freely to all DailyFX Users

Real Time News
  • US Dollar Price Outlook: EUR/USD, GBP/USD, USD/CAD, USD/CHF https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2019/09/16/us-dollar-price-outlook-eur-usd-gbp-usd-usd-cad-usd-chf-js52-usd-chart.html https://t.co/dM4YKDP9qd
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.95%, while traders in France 40 are at opposite extremes with 81.39%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/SlJfOQwCAI
  • $ES_F aiming to close the gap? https://t.co/FLkoN4uukV
  • Commodities Update: As of 13:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 9.24% Silver: 2.02% Gold: 0.70% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/nfExwfKu63
  • $CAD: Loonie loving higher #oil prices. Canadian Dollar strengthening broadly today, as the economy is a major net exporter of crude. Gains most notable versus the #Euro with the Eurozone being a large net oil importer. https://t.co/7Un1GNkZDw
  • $AUD Australian Dollar edges lower. Souring market sentiment typical bodes ill for the Aussie, and today’s move in response to weak China industrial production data and the #SaudiOilStrike seems to be no exception. Also have #RBA minutes event risk on deck - due Monday 20:30 GMT. https://t.co/Pw5iz3tt8w
  • Crude #oil futures saw a record spike higher at the Asia open, with Brent crude gapping higher by 18% to hit 4-month highs following drone attacks on Saudi’s Abqaiq oil facility. Where is crude heading? Get your market update from @JMcQueenFX here: https://t.co/sjJM12uj6U #OOTT https://t.co/YpyUvp8lHx
  • Indices Update: As of 13:00, these are your best and worst performers based on the London trading schedule: US 500: -0.41% Wall Street: -0.41% Germany 30: -0.65% France 40: -0.74% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/efvyGLtem7
  • $EURUSD down 50 pips since 6 AM ET
  • #Gold prices trying to stay afloat around $1,500 with $XAUUSD maintaining its #trading range since August. The upcoming #FederalReserve interest rate is paramount to which direction the #commodity heads next. Lots of other CB’s on the docket too this week. https://t.co/Yd2iO3rMI3
USD/CAD Bear-Flag Starts to Take Shape Amid Shift in Retail Interest

USD/CAD Bear-Flag Starts to Take Shape Amid Shift in Retail Interest

2019-01-14 16:30:00
David Song, Currency Strategist
Share:

Canadian Dollar Talking Points

USD/CAD snaps the bearish sequence from earlier this month despite the uncertainty surrounding U.S. fiscal policy, and the failed attempt to test the December-low (1.3160) appears to be spurring a shift in retail interest even as a bear-flag formation starts to take shape.

Image of daily change for major currencies

USD/CAD Outlook Mired by Shift in Retail Interest, Risk of Bear-Flag

Image of daily change for usdcad

USD/CAD pares the decline following the Bank of Canada (BoC) interest rate decision as market participants mull the fresh comments coming out of the Federal Reserve, and the it seems as though the central bank will continue to project a longer-run interest rate of 2.75% to 3.00% even as the U.S. government shutdown drags on the economic outlook.

At the same time, it remains to be seen if the Federal Open Market Committee (FOMC) will scale back the $50B/month in quantitative tightening (QT) as Chairman Jerome Powell still expects the balance sheet to return to a ‘more normal level,’ and the less-accommodative stance may keep USD/CAD afloat in 2019 as the central bank achieves its dual mandate for full-employment and price stability.

With that said, the broader outlook for USD/CAD remains constructive as the exchange rate continues to retrace the decline from the 2017-high (1.3793), but the recent pickup in market volatility appears to be spurring a shift in retail interest as traders flip net-long for the first time since September.

Image of IG client sentiment for usdcad

The IG Client Sentiment Report shows50.7% of traders are now net-long USD/CAD, with the ratio of traders long to short at 1.03 to 1. The number of traders net-long is 13.3% lower than yesterday and 95.8% higher from last week, while the number of traders net-short is 10.5% lower than yesterday and 29.5% lower from last week.

The decline in net-short position points to profit-taking behavior in light of the decline in the exchange rate, but the sharp accumulation in net-long interest warns of a shift in market behavior even though price and the Relative Strength Index (RSI) snap the bullish formations carried over from late-2018.

In turn, USD/CAD may extend the correction from the December-high (1.3665) before the broader trend takes hold, with the downside targets on the radar for the coming days as a bear-flag appears to be taking shape.Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

USD/CAD Daily Chart

Image of usdcad daily chart
  • Keep in mind, broader outlook for USD/CAD remains constructive following the break of the June-high (1.3386), but the failed attempts to close above the 1.3630 (38.2% retracement) to 1.3660 (78.6% expansion) region raises the risk for a larger correction as both price & the RSI snap the bullish formations from October.
  • In turn, lack of momentum to push back above the 1.3290 (61.8% expansion) to 1.3310 (50% retracement) region brings the downside targets on the radar as the recent series of higher highs & lows start to resemble a bear-flag formation.
  • A short-term continuation pattern would raise the risk for a move back towards 1.3130 (61.8% retracement), with the next region of interest coming in around 1.2980 (61.8% retracement) to 1.3030 (50% expansion).

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2019.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.