Canadian Dollar Outlook: USD/CAD Plummets Towards Major Trend Support
Canadian Dollar Technical Price Outlook: USD/CAD Weekly Trade Levels
- Canadian Dollarupdated technical trade levels - Weekly Chart
- USD/CAD sell-off takes price back towards long-term uptrend support zone
- Broader risk remains lower sub-1.36 – key support at 1.32
The Canadian Dollar rallied more than 1.2% against the US Dollar this week with USD/CAD once again approaching a key support zone we’ve been tracking for months now. It’s make-or-break for the Loonie bulls here with key, long-term, uptrend support just lower. 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.
Canadian Dollar Price Chart – USD/CAD Weekly
Notes: In last month’s Canadian Dollar Weekly Price Outlook we highlighted that USD/CAD had rebounded off key confluence support at the 78.6% retracement of the yearly range at 1.3323/64, while noting to, “look for topside exhaustion ahead of 1.3832 IF price is indeed heading lower.” The advance failed at the 2017 high-week close at 1.3708 before reversing sharply into the close of June trade - that decline is once again approaching Fibonacci support with long-term uptrend support just lower into the 1.32-handle. We’re looking for a reaction down here.
A break / close below the 2016 /2017 pitchfork support slope (blue) is needed to keep the short-bias viable with such a scenario exposing the 61.8% retracement of the 2017 advance at 1.3056. Initial weekly resistance stands at the 61.8% parallel (currently ~1.36) with broader bearish invalidation now lowered to 1.3708.
Bottom line: The USD/CAD sell-off is approaching the upper bounds of a key support zone at 1.3323/64. From a trading standpoint, a good region to reduce short-exposure / lower protective stops – look for topside exhaustion head of this week’s high IF prices ahead indeed heading lower with a break below this long-term slope needed to suggest a larger breakdown is underway. 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-long USD/CAD - the ratio stands at 2.12 (67.94% of traders are long) – bearish reading
- Long positions are20.07% higher than yesterday and 23.13% higher from last week
- Short positions are36.83% lower than yesterday and 31.25% lower 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. Traders are further net-long than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger USD/CAD-bearish contrarian trading bias from a sentiment standpoint.
Key US / Canada Data Releases
Economic Calendar - latest economic developments and upcoming event risk.
Previous Weekly Technical Charts
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- Gold (XAU/USD)
- Australian Dollar (AUD/USD)
- Gold (XAU/USD)
- Japanese Yen (USD/JPY)
- Euro (EUR/USD)
- US Dollar (DXY)
--- 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.