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Canadian Dollar Outlook: USD/CAD Breakout Imminent- Loonie Levels

Canadian Dollar Outlook: USD/CAD Breakout Imminent- Loonie Levels

Michael Boutros, Strategist

Canadian Dollar Technical Price Outlook: Near-term Trade Levels

  • Canadian Dollar updated technical trade levels – Daily & Intraday Charts
  • USD/CAD in consolidation just above September open- breakout imminent
  • Key support 1.2595-1.2614 - Resistance 1.2713 (key), 1.2775 & 1.2822

The Canadian Dollar is virtually unchanged against the US Dollar since the start of the week with USD/CAD contracting into a critical range just below the objective yearly open – the focus is on a possible breakout in the days ahead. 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

Canadian Dollar Price Chart - USD/CAD Daily - Loonie Trade Outlook - Technical Forecast

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

Technical Outlook: In my last Canadian Dollar Price Outlook we noted that, “The USD/CAD recovery has exhausted just ahead of Fibonacci resistance post-BoC and the risk remains for a deeper pullback on the back of this seemingly clear five-wave advance. From a trading standpoint, look to reduce short-exposure / lower protective stops on a stretch towards 1.26- area of interest for possible exhaustion low / price inflection.” Loonie briefly registered an intraday low at 1.2583 the following day with price trading within a contractionary range between the objective monthly open at 1.2615 and the yearly open at 1.2713- we’re on breakout watch.

Canadian Dollar Price Chart – USD/CAD 120min

Canadian Dollar Price Chart - USD/CAD 120min - Loonie Trade Outlook - Technical Forecast

Notes: A closer look at Loonie price action shows USD/CAD in consolidation just above support at the 61.8% retracement of the monthly range / September open at 1.2595-1.2614. Weekly-open resistance eyed at 1.2681 with a breach above the weekly opening-range high needed to mark resumption toward subsequent objectives at the 61.8% Fibonacci retracement of the August decline at 1.2775, the yearly high-day close at 1.2822 and the 100% extension at 1.2851- both areas of interest for possible topside exhaustion IF reached. A downside break of this formation would threaten a larger correction with such a scenario exposing the September low-day close / 100% extension at 1.2525/29 and another Fibonacci confluence at 1.2478/80.

Bottom line: The Canadian Dollar is in consolidation just above the monthly open and we’re looking for the breakout to offer guidance. From a trading standpoint, look for losses to be limited by 1.2595 IF price is indeed heading higher with a breach / close above the yearly open needed to fuel the next leg higher in price. 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

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 +2.33 (69.94% of traders are long) – typically bearish reading
  • Long positions are18.34% higher than yesterday and 19.14% higher from last week
  • Short positions are 25.64% lower than yesterday and 19.83% 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 positioning and recent changes gives us a stronger USD/CAD-bearish contrarian trading bias from a sentiment standpoint.


Key US / Canada Data Releases

Key US / Canada Data Releases - USD/CAD Economic Calendar - Loonie Weekly Event Risk

Economic Calendar - latest economic developments and upcoming event risk.

Active Technical Setups

- Written by Michael Boutros, 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.