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Canadian Dollar Outlook: USD/CAD Rally Stalls- Loonie Levels

Canadian Dollar Outlook: USD/CAD Rally Stalls- 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 rally vulnerable as price stalls into uptrend resistance
  • Resistance 1.2493, 1.2520 (key) - Support 1.2422, 1.2363/78 (critical)
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The Canadian Dollar is virtually unchanged against the US Dollar since the start of the week with USD/CAD holding a tight range in early US trade on Tuesday. The recent USD rally remains vulnerable near-term and we’re looking for a breakout in the hours / days ahead to offer guidance. 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 USD/CAD was, “threatening a breakout here into the November open - the immediate focus is on 1.2365-1.2440 for guidance.” A topside breach & close above the 1.2440 resistance zone on November 4th has failed into uptrend channel resistance for the past four days- is a near-term exhaustion high in place? A breakout of todays range may be the tell.

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 another take on a possible slope structure in USD/CAD with the weekly opening-range taking shape just above near-term support at 1.2422/40- we’re looking for possible inflection off this zone. A break below would threaten a larger USD correction with such a scenario exposing the monthly open at 1.2379 and the 61.8% Fibonacci retracement of the October advance / March low at 1.2363/65- both areas of interest for possible downside exhaustion IF reached. Initial resistance remains at the September low at 1.2493 backed by the 38.2% retracement of the late-September decline at 1.2520- a breach / close above this threshold would suggest a more significant low was registered last month and likely fuel another bout of accelerated gains for the greenback.

Bottom line: USD/CAD has carved a well-defined weekly opening-range just above confluent technical support. From at trading standpoint, a good zone to reduce long-exposure / raise protective stops- look for a breakout of the weekly opening-range for guidance here. Ultimately a move lower may offer more favorable opportunities with a daily close above 1.2520 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 +2.54 (71.76% of traders are long) – typically bearish reading
  • Long positions are5.65% higher than yesterday and 3.66% lower from last week
  • Short positions are 3.23% higher than yesterday and 3.53% 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. Trader are more net-long than yesterday but less 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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Key US / Canada Data Releases

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

Economic Calendar - latest economic developments and upcoming event risk.

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- 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.

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