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Canadian Dollar Forecast: USD/CAD Testing Multi-year Lows for Support

Canadian Dollar Forecast: USD/CAD Testing Multi-year Lows for Support

Michael Boutros, Strategist

Canadian Dollar Technical Price Outlook: USD/CAD Weekly Trade Levels

  • Canadian Dollar updated technical trade levels - Weekly Chart
  • USD/CAD slams into yearly low– threatens break of multi-year uptrend support
  • Weekly close below 1.2951 needed to mark resumption- bearish invalidation 1.3218

The Canadian Dollar rallied 0.27% against the US Dollar into the start of the week with USD/CAD attempting a third weekly decline to lows not seen since late-2018. It’s early in the month and the sell-off is probing a break of the yearly opening-range lows – we’re looking for inflection here this week for guidance with a close below needed to validate a break of multi-year trend support. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical price chart heading into the December open. Review my latest Strategy Webinar for an in-depth breakdown of this Loonie technical setup and more.

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 last month’s Canadian Dollar Weekly Price Outlook we noted that USD/CAD was ranging just above a key support zone and to “respect a break below 1.2951 with such a scenario likely to fuel accelerated losses for the greenback.” Price is testing this threshold into the December open and we’re looking for inflection off this zone early in the month.

A break / weekly close below is needed to keep the short-bias viable towards the median-line (currently ~1.2840s) and the October 2018 low at 1.2782- look for a larger inflection there IF reached with subsequent objectives eyed at confluence channel support at the 2018 yearly open / 78.6% retracement at 1.2579-1.2619. Initial resistance now back at the 61.8% Fibonacci retracement of 2017 advance at 1.3056 with a breach / close above channel resistance / 1.3218 needed to shift to suggest a larger reversal is underway in the Dollar.

Bottom line: A multi-week decline takes USD/CAD to the yearly range lows heading into the December open. From a trading standpoint, a good zone to lighten short-exposure lower protective stops – be on the lookout for inflection here early in the month. A break / close below 1.2952 would validate a larger breakdown here with a close above the February low-week close at 1.3218 needed to shift the broader focus higher again. Keep in mind we have major event risk on tap this Friday with the simultaneous release of US Non-Farm Payrolls (NFP) and Canada employment figures- stay nimble into the December opening-range. 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 Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long USD/CAD - the ratio stands at +3.18 (76.10% of traders are long) – typically bearish reading
  • Long positions are 4.27% higher than yesterday and 28.32% higher from last week
  • Short positions are7.07% lower than yesterday and 8.24% 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. 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.


US / Canada Economic Calendar

Key US / Canada Data Relaeses - 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.