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Canadian Dollar Forecast: USD/CAD Defending Yearly Lows- Key Support

Canadian Dollar Forecast: USD/CAD Defending Yearly Lows- Key Support

Michael Boutros, Strategist

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

  • Canadian Dollar updated technical trade levels - Weekly Chart
  • USD/CAD in consolidation above key support / yearly range lows
  • Resistance / bearish invalidation at 1.2975 - Critical support steady at 1.2579-1.2619
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The Canadian Dollar fractionally lower against the US Dollar with USD/CAD defending the yearly range-lows into the open of the week. The rebound threatens the broader bearish stance and we continue to look for inflection off this zone to offer guidance in the days ahead on whether this is a bear market recovery or a larger reversal. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical price. 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 - 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 that the, “USD/CAD breakdown may be losing steam here as price responds to confluence downtrend support. From a trading standpoint, the threat for a larger recovery remains while above 1.2579.” Price registered a low at 1.2610 today before reversing sharply higher with price poised to mark an outside-day reversal in early US trade.

Loonie turned just ahead of the January lows in USD/CAD and keeps the yearly range in focus while above key confluence support at the 2018 yearly open / 78.6% Fibonacci retracement of 2017 advance at 1.2579-1.2619. Initial weekly resistance eyed at the low-week close at 1.2727 with a breach / weekly close above monthly open resistance at 1.2785 needed to mark a larger reversal. Key resistance / bearish invalidation steady at t the 2020 yearly open at 1.2975. A break lower from here would risk accelerated losses for the US Dollar with such a scenario exposing subsequent support objectives at the 2018 low-week close at 1.2421 and the 88.6% retracement at 1.2358.

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Bottom line: The Canadian Dollar is consolidating within the yearly opening-range just above key technical support at 1.2579-1.2619. From a trading standpoint, a good zone for possible price inflection with the broader short-bias vulnerable while above. Be on the lookout for downside exhaustion head of this threshold with a breach / close above the monthly open at 1.2785 needed to suggest a more significant low is in place. 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 Retail Sentiment - USD/CAD Price Chart - Loonie Technical Forecast - Trade Outlook
  • A summary of IG Client Sentiment shows traders are net-long USD/CAD - the ratio stands at +3.28 (76.65% of traders are long) – typically bearish reading
  • Long positions are 7.13% higher than yesterday and 18.33% higher from last week
  • Short positions are8.72% lower than yesterday and 40.45% 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.
USD/CAD BULLISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -19% 1% -13%
Weekly -22% 29% -10%
Learn how shifts in USD/CAD retail positioning impact trend
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US / Canada Economic Calendar

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

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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