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Canadian Dollar Price Outlook: USD/CAD Recovery Stalls– Loonie Levels

Canadian Dollar Price Outlook: USD/CAD Recovery Stalls– Loonie Levels

2020-06-19 15:30:00
Michael Boutros, Strategist
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Canadian Dollar Technical Price Outlook: USD/CAD Weekly Trade Levels

  • Canadian Dollarupdated technical trade levels - Weekly Chart
  • USD/CAD threatens larger rebound off confluence support
  • Broader risk remains lower sub-1.3832 – key support at 1.32

The Canadian Dollar is fractionally higher against the US Dollar this week with USD/CAD pulling back from near-term resistance after a rally of more than 2.7% off the monthly low. While the recovery may yet have more room, the rebound remains vulnerable after last month’s break and we’re on the lookout for topside exhaustion in the days to ahead. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical price chart. Review my latest Strategy Webinar for an in-depth breakdown of this Loonie trade setup and more.

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Canadian Dollar Price Chart – USD/CAD Weekly

Canadian Dollar Price Chart - USD/CAD Weekly - Loonie Trade Outlook - Technical Forecast

Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview

Notes:In last month’s Canadian Dollar Weekly Price Outlook we noted to be on the lookout for a, “stretch lower with a close below 1.3793 needed to keep the short-bias viable.” A break lower in late-May fueled a sell-off of more than 3.3% with USD/CAD rebounding sharply last week off the 78.6% retracement of the yearly range at 1.3323.

Initial weekly resistance stands with the 2017 high-week close at 1.3647 with bearish invalidation now lowered to the 2017 high / 38.2% retracement at 1.3793-1.3831- a breach / close above this threshold is needed to mark resumption of the broader uptrend. Initial support steady at 1.3515 backed by 1.3323 and the February low at 1.3202- a close below this level would risk a larger trend reversal with such a scenario exposing yearly open support at 1.2975.

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Bottom line: USD/CAD rebounded off confluence support last week and the focus is on this near-term recovery. From a trading standpoint, look for topside exhaustion ahead of 1.3832 IF price is indeed heading lower. Ultimately, a larger correction may offer more favorable entries closer to uptrend support. I’ll publish an updated Canadian Dollar Price Outlook once we get further clarity on 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

Canadian Dollar Trader Sentiment - USD/CAD Price Chart - Loonie Trade Outlook - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long USD/CAD - the ratio stands at 1.72 (63.25% of traders are long) – bearish reading
  • Long positions are2.88% higher than yesterday and 23.70% higher from last week
  • Short positions are16.93% higher than yesterday and 15.12% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USD/CAD prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed USD/CAD trading bias from a sentiment standpoint.
USD/CAD MIXED
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Change in Longs Shorts OI
Daily 1% 1% 1%
Weekly 14% -5% 5%
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Key US / Canada Data Releases

Key US / Canada Data Releases - USD/CAD Economic Calendar - Loonie Event Risk

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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