Canadian Dollar Technical Price Outlook: Near-term Trade Levels
- Canadian Dollar updated technical trade levels – Daily & Intraday Charts
- USD/CAD sell-off approaching critical long-term uptrend support around ~1.32
- Key near-term resistance at 1.34 – break lower exposes 1.31
The Canadian Dollar offensive against the US Dollar continues into the start of August trade with USD/CAD breaking to fresh five-month lows. The decline takes price into a critical slope at long-term uptrend support and we’re looking for a reaction in price just lower. These are the updated targets and invalidation levels that matter on the USD/CAD price charts heading into the close of the week. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Loonie trade setup and more.
Canadian Dollar Price Chart – USD/CAD Daily
Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview
Technical Outlook: In my last Canadian Dollar Price Outlook we highlighted that our focus was on, “a break of the monthly opening-range for guidance with the risk weighted to the downside while below 1.3610.” USD/CAD registered an intraday high at 1.36 the following day before reversing sharply lower to break below the July opening-range lows and keeps the risk weighted to the downside near-term.
The decline is now approaching confluence support around ~1.3202 where the February lows converges on multi-year pitchfork support extending off the 2017 lows- look for a reaction there IF reached. A break lower keeps the focus on the 88.6% Fibonacci resistance at 1.3152 and the lower parallel (magenta) near ~1.3060s.
Canadian Dollar Price Chart – USD/CAD 120min
Notes: A closer look at Loonie price action shows USD/CAD trading within the confines of a descending pitchfork formation extending off the late-June high. A break below the median-line risks a test of the lower parallel – which currently converges on the 1.32 confluence support zone. Initial resistance back at 1.3323 with near-term bearish invalidation now lowered to the August open at the 1.34-handle.
Bottom line: The USD/CAD sell-off is now approaching long-term uptrend support and while the immediate threat is lower, the decline may be vulnerable heading into this key region. From a trading standpoint, look to reduce short-exposure / lower protective stops on a test of the 1.32-handle – rebounds should be capped by the monthly open IF price is heading lower on this stretch with a close below trendline support needed to mark resumption of the March downtrend. Review my latest Canadian Dollar Weekly Price Outlook for a closer look at the longer-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 +1.46 (59.39% of traders are long) – weak bearish reading
- Long positions are13.65% lower than yesterday and 17.95% lower from last week
- Short positions are 3.12% lower than yesterday and 8.60% 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. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/CAD price trend may soon reverse higher despite the fact traders remain net-long.
| Change in | Longs | Shorts | OI |
| Daily | -11% | 1% | -5% |
| Weekly | -3% | -1% | -2% |
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Economic Calendar - latest economic developments and upcoming event risk.
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- Written by Michael Boutros, Currency Strategist with DailyFX
Follow Michael on Twitter @MBForex
