Canadian Dollar Outlook: USD/CAD Range Coils– Loonie Break Imminent

2021-04-14 15:41:00

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Canadian Dollar Technical Price Outlook: Near-term Trade Levels
Canadian Dollar Price Chart – USD/CAD Daily
Canadian Dollar Price Chart – USD/CAD 120min
Canadian Dollar Trader Sentiment – USD/CAD Price Chart
Key US / Canada Economic Data Releases
Active Technical Setups

Canadian Dollar Technical Price Outlook: Near-term Trade Levels

Canadian Dollar updated technical trade levels – Daily & Intraday Charts
USD/CAD contracting into monthly opening range, below key resistance zone
Bulls vulnerable while above 1.26 – Key Support into 1.2473/89

The Canadian Dollar has continued to consolidate within the April range – just below resistance, just above trend support. We’re on breakout watch with the bulls vulnerable below the weekly high. These are the updated targets and invalidation levels that matter on the USD/CAD price charts. Review my latest Strategy Webinar for an in-depth breakdown of this Loonie technical setup and more.

Canadian Dollar Price Chart – USD/CAD Daily

Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview

Technical Outlook: In my last Canadian Dollar Price Outlook we noted that the April opening-range was being carved out just below a technical resistance zone at 1.2579-1.2606 – numerous intraday attempts have failed to close above this threshodl with the monthly range now contracting into the March uptrend. Key support rests with the 61.8% Fibonacci retracement of the March rally / yearly low-day reversal close at 1.2468 with a break below the yearly close-low at the 1.24-handle ultimately needed to mark resumption of the broader downtrend. A topside breach of the monthly range highs would suggest a more significant low was registered last month with such a scenario exposing yearly open resistance at 1.2713.

Canadian Dollar Price Chart – USD/CAD 120min

Notes: A closer look at Loonie price action shows USD/CAD continuing to trade within the confines of an ascending pitchfork formation extending off the yearly lows. An embedded consolidation formation may be in play here just below resistance into the 1.26-handle- look for the break to offer guidance here with a breach above the late-March high at 1.2647 needed to shift the focus towards subsequent resistance objectives at 1.2684 and 1.2713. Weekly open support at 1.2523 backed by key near-term support at 1.2473/89 – area of interest for possible downside exhaustion IF reached.

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Bottom line: USD/CAD is contracting within the April opening-range, just below confluence resistance. From a trading standpoint, we’re on breakout watch with the broader recovery at risk below 1.26 – look for inflection off the 1.2523/27 support zone for guidance with a breach / close above 1.2647 ultimately needed to suggest a larger reversal is underway. Review my latest Canadian Dollar Weekly Price Outlook for a closer look at the longer-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

A summary of IG Client Sentiment shows traders are net-long USD/CAD - the ratio stands at +2.21 (68.83% of traders are long) – weak bearish reading
Long positions are15.11% higher than yesterday and 30.76% higher from last week
Short positions are 20.23% lower than yesterday and 19.30% 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 sentiment and recent changes gives us a stronger USD/CAD-bearish contrarian trading bias from a sentiment standpoint.