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Canadian Dollar Forecast: Loonie Stalled at Support– USD/CAD Levels

Canadian Dollar Forecast: Loonie Stalled at Support– USD/CAD Levels

2020-11-20 18:30:00
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 sell-off stalls just above yearly lows
  • Key support 1.2951 – Resistance / bearish invalidation at 1.3232
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The Canadian Dollar rallied 0.23% against the US Dollar this week but keeps USD/CAD just above the 2020 lows. Loonie is poised to close the week mid-range and while the broader risk remains weighted to the downside, the decline may be vulnerable here heading into the close of the month. 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 technical setup and more.

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Canadian Dollar Price Chart – USD/CAD Weekly

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

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 had, “responded to confluence resistance and heading into the October open the focus remains on a reaction / inflection off this key threshold.” A test of channel resistance held before reversing lower again with price probing the yearly lows last week- so what now?

Confluence resistance stands with the June trendline / 61.8% Fibonacci retracement of the September decline at 1.3232 – a breach / close above this threshold would be needed to shift the focus higher in price towards 1.3418 and the May 2019 high / 38.2% retracement of the yearly range at 1.3565/92. Look for an intraweek pivot around 1.3057 with a break below 1.2951 needed to mark resumption towards channel support / the October 2018 low at 1.2782.

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Bottom line: USD/CAD is trading into the middle of a multi-week range just below channel resistance. From a trading standpoint, the decline remains vulnerable near-term while above 1.3056- be on the lookout for downside exhaustion with a breach / close above 1.3232 needed suggest a larger recovery is underway. That said, respect a break below 1.2951 with such a scenario likely to fuel accelerated losses for the greenback. 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

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 +2.30 (69.71% of traders are long) – bearish reading
  • Long positions are0.83% lower than yesterday and 0.42% lower from last week
  • Short positions are5.05% higher than yesterday and 4.70% 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. 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.
USD/CAD MIXED
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 5% 6% 5%
Weekly 31% 4% 23%
Learn how shifts in USD/CAD retail positioning impact trend
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Key US / Canada Data Releases

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