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Canadian Dollar Forecast: Did USD/CAD Just Bottom? Loonie Levels

Canadian Dollar Forecast: Did USD/CAD Just Bottom? Loonie Levels

Michael Boutros, Strategist

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

  • Canadian Dollarupdated technical trade levels - Weekly Chart
  • USD/CAD rebounds off technical downtrend support post-FOMC
  • Resistance / bearish invalidation at 1.2774 - Critical support 1.2358
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The Canadian Dollar is virtually unchanged against the US Dollar into the start of the week as range conditions grip the USD majors. An outside-day reversal off downtrend support post-FOMC last week has lost steam in the middle of the March range. The threat of a larger recovery remains in the days ahead but all within the confines of the broader June decline- we need some volatility to stir things up a bit. 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 my last Canadian Dollar Weekly Price Outlook we noted that USD/CAD had, “failed a break below a critical support confluence we’ve been tracking for months now and leaves the bears vulnerable while above.” The level in focus was 1.2579-1.2619 – a region defined by the 2018 yearly open and the 78.6% Fibonacci retracement of 2017 advance. A decisive break on March 11th fueled a decline of nearly 3% off the monthly highs before rebounding sharply on the heels of the Fed rate decision last week. Was that rebound off downtrend support a more significant low?

Initial weekly support remains with the 2018 low-week close at 1.2121 backed by the 88.6% retracement at 1.2358- a break / weekly close below this threshold is needed to mark resumption of the broader downtrend with such a scenario exposing the 2017 low-week close at 1.2156. Resistance now stands back at 1.2579-1.2919 – look for stronger inflection there IF reached with bearish invalidation lowered to the yearly high-week close at 1.2774.

Bottom line: The Canadian Dollar (USD/CAD) has rebounded off confluence downtrend support – the focus is on this recovery with a pivot above 1.2619 needed to suggest a more significant low was registered last week. From a trading standpoint, look for downside exhaustion ahead of 1.2421 on pullbacks IF price is indeed heading higher on this stretch. I’ll publish an updated latest Canadian Dollar Price Outlook once we get further clarity on 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 +2.39 (70.49% of traders are long) – typically bearish reading
  • Long positions are 9.08% higher than yesterday and 11.05% lower from last week
  • Short positions are28.52% higher than yesterday and 5.79% 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 - Weekly 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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