Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels
- Canadian Dollar updated technical trade levels - Weekly Chart
- USD/CAD January rally halted at key pivot zone- US CPI on tap
- Weekly support 1.2640, ~1.2424 (critical) – Resistance 1.2768-1.2814 (key), 1.2975-1.3023
The Canadian Dollar attempting to mount a counteroffensive against the US Dollar early in the month after USD/CAD rallied more than 2.7% off the January lows. The move takes price into a major technical pivot zone and we’re on the lookout for a possible exhaustion low in the days ahead. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical price chart heading into key US & Canada inflation reports. Review my latest 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: In last month’s Canadian Dollar Weekly Technical Forecast we highlighted the threat for deeper pullback in USD/CAD while noting to , “be on the lookout for a reaction / possible exhaustion low ahead of 1.2530s early in the month…” The US Dollar plummeted more than 3.7% off the December highs to briefly register an intra-week low at 1.2450 before rebounding off the lower parallel.
USD/CAD held key support at the 52-week moving average on a weekly close basis with the subsequent recovery stretching into key resistance into the close of January at 1.2768-1.2814- a region defined by the 61.8% Fibonacci retracement of the December decline and the 2021 high-week reversal close. A topside breach / weekly close above this threshold is needed to mark resumption of the broader uptrend with such a scenario exposing the median-line (currently ~1.29) and critical resistance at the 2020 yearly open / 38.2% retracement of the 2020 decline at 1.2975-1.3023. Initial weekly support rests at the yearly open at 1.2640 with broader bullish invalidation steady at the 52-week moving average / lower parallel near ~1.2524- look for a low ahead of this threshold IF USD/CAD is indeed heading higher.
Bottom line: A rebound off uptrend support takes USD/CAD into a major technical pivot zone at 1.2768-1.2814- look for a break of the monthly opening-range for guidance with the broader outlook weighted to the topside while within this formation off the 2021 lows. From a trading standpoint, be on the lookout for an exhaustion low ahead of 1.2524 in the weeks ahead with a breach higher keeping the focus on slope resistance near the 2021 highs. Keep in mind we get key inflation reports from the US & Canada over the next week- expect volatility and be mindful of the weekly closes. 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
- A summary of IG Client Sentiment shows traders are net-long USD/CAD - the ratio stands at +1.71 (63.1% of traders are long) – typically bearish reading
- Long positions are4.68% lower than yesterday and 4.39% higher from last week
- Short positions are 18.13% higher than yesterday and 12.58% 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.
| 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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