Weekly Technical Perspective on the Canadian Dollar (USD/CAD)
- A look at the weekly technicals as the USD/CAD presses fresh yearly highs
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In this series we scale-back and take a look at the broader technical picture to gain a bit more perspective on where we are in trend. The Canadian Dollar has been under tremendous pressure since the start of the year with USD/CAD rallying more than 8% off the yearly lows. The advance has taken price through multi-year slope resistance and keeps broader focus weighted to the topside. Here are the key levels that matter on the USD/CAD weekly chart. Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.
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USD/CAD Weekly Price Chart
Notes: USD/CAD broke through the upper parallel of a descending pitchfork formation extending off the 2016 highs last week with price closing above a confluence Fibonacci zone at 1.3103/32. The pair is attempting to breach 2017 channel resistance this week with such a scenario targeting subsequent topside objectives eyed at 1.3423. Interim support rest back at 1.31 with broader bullish invalidation down at the trendline confluence around ~1.2980s.
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Bottom line: IF this breakout has legs, look for entries on a pullback towards 1.3103/32. A weekly close above the near-term slope (purple) would be needed to keep the focus higher targeting 1.3423 backed by more significant resistance at the 2017 high-week close / 61.8% retracement (of the 2016 decline) at 1.3647/85.
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USD/CAD IG Trader Sentiment
- A summary of IG Client Sentiment shows traders are net-short USD/CAD- the ratio stands at -2.42 (29.3% of traders are long) –bullishreading
- Traders have remained net-short since May 22nd; price has moved 3.0% higher since then
- Long positions are 2.2% higher than yesterday and 11.3% lower from last week
- Short positions are8.0% higher than yesterday and 26.4% 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 and 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.
See how shifts in USD/CAD retail positioning are impacting trend- Learn more about sentiment!
Relevant USD/CAD Data Releases
Economic Calendar– for the latest economic developments and upcoming event risk
Previous Weekly Technical Perspectives
- Weekly Technical Perspective on the US Dollar (DXY)
- Weekly Technical Perspective on the Aussie (AUD/USD)
- Weekly Technical Perspective on the Euro (EUR/USD)
- Weekly Technical Perspective on AUD/JPY
--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex or contact him at firstname.lastname@example.org
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.