Canadian Dollar Price Outlook: Virus Breakout Fuel Loonie, Oil Plunge
Canadian Dollar Technical Price Outlook: USD/CAD Weekly Trade Levels
- Canadian Dollar updated technical trade levels - Weekly Chart
- USD/CAD breakout accelerates as Coronavirus Pandemic / Oil Price War fears deepen
- Loonie losses take USD/CAD above long-term uptrend resistance- constructive above 1.4115
The Canadian Dollar breakdown continues with Loonie off more than 4.4% against the US Dollar since the start of the week. The USD/CAD breakout has accelerated to fresh four-year highs as the Coronavirus pandemic cripples’ global markets. Collapsing crude prices have provided a tailwind to the breakout with oil now off a staggering 63% from the yearly highs. The move keeps the outlook weighted to the topside in USD/CAD with the price rally now targeting uptrend resistance just higher. 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.
Canadian Dollar Price Chart – USD/CAD Weekly
Notes: In my last Canadian Dollar Weekly Price Outlook we noted that the USD/CAD breakout was approaching multi-year uptrend resistance while citing that a topside, “breach from here exposes subsequent resistance objectives at the 61.8% ext at 1.3949 backed by the median-line and the 2016 high-week reversal close / 78.6% retracement at 1.4115/27.” Price ripped through this threshold yesterday with USD/CAD poised to mark the largest weekly advance since September 2011 and the largest weekly range since January 2009.
Initial weekly resistance is eyed at the 75% parallel of the ascending pitchfork formation (currently ~1.4475) backed by a critical technical confluence at 1.4534/64- a region defined by the 2016 high-close and the 100% extension of the 2017 advance; look for a larger reaction there IF reached. Weekly support now rests at back at 1.4115/27 with bullish invalidation now raised to 1.3949.
Bottom line: The USD/CAD breakout has broken through multi-year uptrend extremes with the focus on upcoming resistance objectives just higher. From a trading standpoint, look to reduce long-exposure / raise protective stops on a test of uptrend resistance (risk for near-term exhaustion) with a breach / weekly close above 1.4565 needed to fuel the next leg higher in price. 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
- A summary of IG Client Sentiment shows traders are net-short USD/CAD - the ratio stands at -1.74 (36.55% of traders are long) – bullish reading
- Long positions are 7.42% higher than yesterday and 36.67% higher from last week
- Short positions are5.95% lower than yesterday and 15.11% 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 and compared with last week. The recent changes in sentiment warn that the current USD/CAD price trend may soon reverse lower despite the fact traders remain net-short.
Key US / Canada Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
Previous Weekly Technical Charts
- Gold (XAU/USD)
- Mexican Peso (USD/MXN)
- Australian Dollar (AUD/USD)
- Euro (EUR/USD)
- US Dollar (DXY)
- British Pound (GBP/USD)
--- 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.