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Canadian Dollar Forecast: USD/CAD Grinds at Resistance– Breakout Levels

Canadian Dollar Forecast: USD/CAD Grinds at Resistance– Breakout Levels

Michael Boutros, Strategist

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

  • Canadian Dollar updated technical trade levels - Weekly Chart
  • USD/CAD recovery struggles at major resistance pivot
  • Weekly support ~1.24, 1.2312 – Critical resistance 1.2579-1.2634

The Canadian Dollar is fractionally higher against the US Dollar this week with USD/CAD down more than 0.25% on Thursday in New York. The dollar losses come on the heels of a turn from technical resistance and the threat remains for a deeper pullback in the days ahead before attempting a resumptive rally. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical 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 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 rally exhausted into uptrend resistance at the yearly high-week close this week- bulls may be at risk near-term. From a trading standpoint, rallies should be limited to the yearly open at 1.2713IF the correction interpretation is correct.” Price plunged more than 3% off the highs in the following weeks with Loonie rebounding off slope support into the July close. The subsequent recovery is now testing major technical resistance here at the 2018 yearly open / 23.6% retracement of the 2020 decline at 1.2579-1.2634- looking for inflection off this pivot zone.

Initial support rests with the sliding parallel (red) extending off the January 2019 close low (currently near the 1.24-handle with bullish invalidation at the 2018 low / 61.8% Fibonacci retracement at 1.2247-1.2312- an are of interest for possible downside exhaustion IF reached. A topside breach / close above the 52-week moving average is needed to validate a larger breakout here with such a scenario once again exposing the high-week close at 1.2774 and critical resistance into 1.2975-1.3023.

Bottom line: USD/CAD is trading just below a major technical pivot zone and the risk for a deeper correction remains while below this threshold. From a trading standpoint, look for exhaustion ahead of 1.2634 with a larger pullback likely to offer more favorable entries for broader trend resumption closer to 1.23. 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 Outlook
  • A summary of IG Client Sentiment shows traders are net-long USD/CAD - the ratio stands at +1.71 (63.13% of traders are long) – typically bearish reading
  • Long positions are6.65% lower than yesterday and 2.15% higher from last week
  • Short positions are 8.93% higher than yesterday and 1.63% 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. 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.


US / Canada Economic Calendar

US / Canada Economic Calendar - USD/CAD Weekly Event Risk

Economic Calendar - latest economic developments and upcoming event risk.

Active 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.