Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels
- Canadian Dollar updated technical trade levels - Weekly Chart
- USD/CAD threatens larger correction off technical resistance- NFP / Canada Employment on tap
- Weekly support ~1.26, 1.2530(key) – Resistance 1.2814, 1.2975-1.3023 (critical)
The Canadian Dollar is on the defensive against the US Dollar into the start of the year as USD/CAD attempts to snap a two-week losing streak. The Dollar recovery may be short-lived in the days ahead as price threatens a larger correction within the broader uptrend. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical price chart heading into January trade with US Non-Farm Payrolls and Canada employment data on tap tomorrow. Join my weekly Strategy Webinar for an in-depth breakdown of this Loonie technical setup and more.
Canadian Dollar Price Chart – USD/CAD Weekly
Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview
Notes: USD/CAD registered a high (1.2963) just pips ahead of a critical resistance zone last year at 1.2975-1.3023- a region defined by the 2020 yearly open / 38.2% Fibonacci retracement of the 2020 decline. A pullback of more than 1.7% faltered just ahead of the 25% parallel of a proposed ascending pitchfork formation extending off the 2021 lows- is the correction complete?
The focus into the start of month is on identifying an exhaustion low in price within the confines of the broader June advance. Initial weekly support rests near the December lows around ~1.26 backed by a more significant confluence zone at the 52-week moving average / 61.8% retracement at 1.2533/46 – losses should be limited to this threshold IF the US Dollar is heading higher on this stretch. Resistance stands with the 2021 high-week close at 1.2814 with a breach / close above 1.3023 needed to fuel the next leg higher towards subsequent resistance objectives into the upper parallel / 100% extension at 1.3230.
Bottom line: The risk remains for a deeper pullback in USD/CAD while below key resistance at 1.2975-1.3023. From a trading standpoint, be on the lookout for a reaction / possible exhaustion low ahead of 1.2530s early in the month with a breach above the 2021 range highs needed to clear the way for the Dollar. Stay nimble heading into the close of the week with US Non-Farm Payrolls (NFP) and Canada employment on tap tomorrow. I’ll publish an updated Canadian Dollar Price Outlook once we get further clarity on 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
- A summary of IG Client Sentiment shows traders are net-long USD/CAD - the ratio stands at +1.42 (58.71% of traders are long) – typically bearish reading
- Long positions are0.38% lower than yesterday and 3.99% lower from last week
- Short positions are 16.59% lower than yesterday and 7.46% 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.
| Change in | Longs | Shorts | OI |
| Daily | -2% | 7% | 5% |
| Weekly | -30% | 38% | 13% |
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--- Written by Michael Boutros, Technical Currency Strategist with DailyFX
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