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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. Here are the key targets & invalidation levels that matter on the weekly chart for the US Dollar vs the Canadian Dollar (USD/CAD). Review this week’s Strategy Webinar for an in-depth breakdown of this setup and more.

New to Forex Trading? Get started with this Free Beginners Guide

USD/CAD Weekly Price Chart

USD/CAD Weekly Price Chart

Notes: In last month’s Weekly Technical Perspective on the Canadian Dollar, we highlighted a breach above confluence resistance in USD/CAD at 1.3103/32 where the 100% extension of the advance converges on the 61.8% retracement of the 2017 range. Price rallied into the 50% Fibonacci retracement of the 2016 decline at 1.3376 with the Loonie posting an outside-day reversal of this threshold yesterday- bearish.

Price is now testing the 1.3103/32 threshold as support and a break lower here would suggest a larger correction is underway targeting the slope confluence just lower around ~1.2970 backed by the 200-week moving average / channel support at ~1.2830s.

For a complete breakdown of Michael’s trading strategy, review his Foundations of Technical Analysis series on Building a Trading Strategy

Bottom line: Look for resist ahead of 1.3288 (61.8% retracement of the recent decline) if this is going to work with a break below 1.31 needed to fuel the next leg lower. Intraday trading levels remain unchanged from last week’s USD/CAD Technical Outlook. Keep in mind we get the release of both US Non-Farm Payrolls (NFP) and Canadian employment on Friday with the releases likely to fuel added volatility in the pair.

Even the most seasoned traders need a reminder every now and then-Avoid these Mistakes in your trading

USD/CAD Trader Positioning

USD/CAD Trader Positioning
  • A summary of IG Client Sentiment shows traders are net-short USD/CAD- the ratio stands at -2.94 (25.4% of traders are long) – bullishreading
  • Traders have remained net-short since May 22nd; price has moved 2.9% higher since then
  • Long positions are 6.5% higher than yesterday and 13.5% lower from last week
  • Short positions are0.3% lower than yesterday and 18.4% 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 3traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/CAD price trend may soon reverse lower despite the fact traders remain net-short.

See how shifts in USD/CAD retail positioning are impacting trend- Learn more about sentiment!

Relevant USD/CAD Data Releases

USD/CAD Economic Calendar

Economic Calendar– for the latest economic developments and upcoming event risk

Previous Weekly Technical Perspectives

--- Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex or contact him at mboutros@dailyfx.com