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Canadian Dollar Price Outlook: USD/CAD Losses Steepen- Loonie Levels

Canadian Dollar Price Outlook: USD/CAD Losses Steepen- Loonie Levels

Michael Boutros, Strategist

Canadian Dollar Technical Price Outlook: USD/CAD Weekly Trade Levels

The Canadian Dollar is poised to closed the second consecutive weekly advance against the US Dollar with USD/CAD off by more than 0.2% to trade at 1.3220 ahead of the New York close on Friday. The move comes on the heels of last week’s price reversal and while the risk for a deeper pullback remains, price continues to trade within a broad multi-year consolidation pattern. These are the updated targets and invalidation levels that matter on the USD/CAD weekly price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Loonie trade setup and more.

Canadian Dollar Price Chart – USD/CAD Weekly

Weekly USDCAD Price Chart

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 was, “testing initial resistance targets and we’re on the lookout for possible topside exhaustion near-term heading into yearly slope resistance just higher.” Price registered a high just above the 50% retracement at 1.3329 before reversing last week with the sell-off marking the second consecutive weekly decline. Note that weekly RSI has maintained its stance below the 60-threshold since the late 2018 high and highlights that the momentum profile remains in favor of the bears, for now.

Key weekly support rests with the July low-week close / 61.8% retracement at 1.3059/96 backed by the 100% extension / yearly open at 1.2972/75. Ultimately a break below the 2019 trendline would be needed to fuel the next major leg lower in price. Initial weekly resistance steady at 1.3308 with a breach / close above 1.3370/92 needed to validate a larger breakout in USD/CAD

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Bottom line: USD/CAD remains within the confines of a broad multi-year consolidation pattern with the recent rally turning just ahead of trend resistance. From at trading standpoint, the risk remains lower heading into next week but ultimately the trade remains range-bound until we clear this formation. Look for signs of downside exhaustion on a move lower towards the 1.31-handle for guidance here. Review my latest Canadian Dollar Price Outlook for a closer look at 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

USDCAD Trader Sentiment
  • A summary of IG Client Sentiment shows traders are net-short USD/CAD - the ratio stands at -2.61 (27.72% of traders are long) – bullish reading
  • Long positions are16.13% higher than yesterday and 22.03% higher from last week
  • Short positions are2.21% lower than yesterday and 30.14% 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.

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Key US / Canada Data Releases

Key US/Canada Data Releases

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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