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Canadian Dollar Outlook: USD/CAD Probes Critical Pivot- Loonie Levels

Canadian Dollar Outlook: USD/CAD Probes Critical Pivot- 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 presses deeper into key technical support zone- risk remains for near-term inflection
  • Resistance 1.2546, 1.2640/49 (key) - Support 1.2432/70 (key), 1.2362/72, 1.2288
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The Canadian Dollar rallied more than 0.50% against the US Dollar since the start of the week with USD/CAD continuing to press a key technical support pivot. Once again we’re on inflection watch with the bears vulnerable into this zone. 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 last week Canadian Dollar Price Outlook we noted that the a break of the, “monthly open / opening-range lows taking price towards a key support zone at the 78.6% Fibonacci retracement of the October rally / 100% extension of the December decline at 1.2432/70.” This threshold has continued to limit the downside and the focus remains on possible inflection in the days ahead. It’s make-or-break here.

Canadian Dollar Price Chart – USD/CAD 240min

Canadian Dollar Price Chart - USD/CAD 240min - Loonie Trade Outlook - Technical Forecast

Notes: A closer look at Loonie price action shows USD/CAD continuing trading within the confines of the near-term descending pitchfork off the December. Some fine-tuning on the slope sees the median-line converging on the 1.2432/70 support threshold and further highlights the technical significance of this pivot zone. Weekly open resistance at 1.2530/46 with near-term bearish invalidation steady at the yearly open / 38.2% retracement of the December decline at 1.2640/49. Note that a break lower from here could fuel another accelerated bout of selling with such a scenario exposing subsequent support objectives at the October low-day close / 61.8% retracement of the June advance at 1.2362/72,the October low 1.2288 and the 2018 low at 1.2247.

Bottom line: The focus remains on this pivot-zone with the broader decline vulnerable while above 1.2432. Form a trading standpoint, be on the lookout for an exhaustion low with a breach above the weekly range highs needed to fuel a larger recovery. Stay nimble here- things could fall apart very quickly IF this breaks. 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 +2.74 (73.29% of traders are long) – typically bearish reading
  • Long positions are0.85% higher than yesterday and 8.63% higher from last week
  • Short positions are 13.16% higher than yesterday and 9.23% 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 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 Weekly Event Risk - Loonie Data Releases

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.

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