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Canadian Dollar Forecast: USD/CAD Bears Fail at Support- March Levels

Canadian Dollar Forecast: USD/CAD Bears Fail at Support- March Levels

Michael Boutros, Strategist

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

  • Canadian Dollarupdated technical trade levels - Weekly Chart
  • USD/CAD sell-off fails at critical support – bears vulnerable into March open
  • Resistance / bearish invalidation at 1.2975 - Critical support steady at 1.2579-1.2619
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The Canadian Dollar rally seemingly lost steam against the US Dollar last week with USD/CAD rebounding sharply off key technical support into the close of February trade. The rally covered nearly 70% of the year-to-date range in just two days with the reversal threatening a larger recovery in the weeks ahead. 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.

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 was trading, “just above key technical support at 1.2579-1.2619,” – a region defined by the 2018 yearly open and the 78.6% Fibonacci retracement of 2017 advance. An intra-week drop registered a low at 1.2468 / channel support before rebounding sharply, nearly posting an outside-week reversal to close back above this key support zone. Is a low in place?

Initial weekly resistance stands at the median-line (currently ~1.2770s) backed by the yearly opening-range high at 1.2881. Ultimately a breach / weekly close above the 2020 yearly open at 1.2975 would be needed to suggest a more significant trend reversal is underway- look for a larger price inflection there IF reached. A close below 1.2579 is still needed to mark resumption of the broader downtrend with subsequent support objectives unchanged at the 2018 low-week close at 1.2421 and the 88.6% retracement at 1.2385.

Bottom line: The Canadian Dollar has failed a break below a critical support confluence we’ve been tracking for months now and leaves the bears vulnerable while above. From a trading standpoint, look for downside exhaustion ahead of 1.2579 IF price is indeed heading higher with a breach above the median-line needed to keep the focus on broader downtrend resistance. Stay nimble as we head into the March 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 Retail Positioning - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long USD/CAD - the ratio stands at +1.31 (56.77% of traders are long) – typically bearish reading
  • Long positions are 14.67% higher than yesterday and 33.02% lower from last week
  • Short positions are68.53% higher than yesterday and 52.53% 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.

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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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