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Canadian Dollar Forecast: USD/CAD Seven-Week Plunge Searches Support

Canadian Dollar Forecast: USD/CAD Seven-Week Plunge Searches Support

Michael Boutros, Strategist

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

  • Canadian Dollar updated technical trade levels - Weekly Chart
  • USD/CAD six-week breakdown plummets into technical support hurdle – Canada Inflation on tap
  • Support objectives at 1.2048, 1.1919- Resistance 1.2247, bearish invalidation 1.2358
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The Canadian Dollar has plummeted more than 5% against the US Dollar year-to-date with USD/CAD attempting to mark a seventh consecutive weekly decline into fresh multi-year lows. While the broader risk remains tilted to the downside, the immediate sell-off may be vulnerable as price probes near-term technical confluence. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical price chart. 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 Technical Forecast - Trade Outlook

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

Notes: In my last Canadian Dollar Weekly Price Outlook we noted that the USD/CAD breakdown marking its fifth consecutive weekly decline with sell-off, “targeting 1.2048 and the May 2015 low at 1.1919.” USD/CAD registered a low at 1.2045 last week before rebounding with the immediate focus still on key support here at the 50% retracement of the 2011 rally / 2017 swing low at 1.2048/61- looking for possible inflection here.

A break / close below keeps the focus on the May 2015 low at 1.1919 and the 1.618% Fibonacci extension of the yearly decline at 1.1819 – both areas of interest for possible exhaustion IF reached. Initial weekly resistance stands back at former trendline support (currently ~1.22) backed by the 2018 swing low at 1.2247- rallies should be capped by this threshold IF prices are indeed heading lower. Broader bearish invalidation now lowered to 1.2358.

Bottom line: The USD/CAD breakdown has stalled into lateral technical support at 1.2048/61 and the focus is on a reaction off this mark. From a trading standpoint, a good zone to reduce short-exposure / lower protective stops – be on the lookout for exhaustion head of the channel line on recoveries with a break / close lower risking another acerated decline towards subsequent objectives near the 1.19-handle. Keep in mind we get the release of key Canada inflation data on Wednesday – stay nimble here. Review my latest Canadian Dollar Price Outlookfor 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 - Retail Positioning - Technical Forecast
  • A summary of IG Client Sentiment shows traders are net-long USD/CAD - the ratio stands at +4.02 (80.07% of traders are long) – typically bearish reading
  • Long positions are8.23% higher than yesterday and 10.20% higher from last week
  • Short positions are 22.18% higher than yesterday and 6.77% 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 but more net-long from last week. The combination of current positioning and recent changes gives us a further mixed USD/CAD trading bias from a sentiment standpoint.

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US / Canada Economic Calendar

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

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