News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Canadian Dollar Technical Outlook: USD/CAD Coiling- Breakout Imminent

Canadian Dollar Technical Outlook: USD/CAD Coiling- Breakout Imminent

Michael Boutros, Strategist

Canadian Dollar Technical Price Outlook: Near-term Trade Levels

  • Canadian Dollar updated technical trade levels – Daily & Intraday Charts
  • USD/CAD contracts into February opening-range- potential breakout event
  • Resistance 1.2724 (key), 1.2767, 1.2813 - Support 1.2640/64 (key), 1.2582, 1.2514
Advertisement

The US Dollar is off more than 0.50% against the Canadian Dollar since the start of the week with USD/CAD continuing to coil within a well defined technical range. We’re on the lookout for a potential breakout in the days ahead with the late-January rally vulnerable while below the weekly high. 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 mylast Canadian Dollar Price Outlook we noted that the USD/CAD pullback was, “testing near-term uptrend support here – for now, we’re on the lookout for a possible exhaustion low.” A low was registered that day with price rallying more than 1% before faltering once again at the 61.8% Fibonacci retracement of the December decline at 1.2767. The monthly opening-range is set just above the objective yearly open and the battle-lines have are drawn.

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 to contract within the monthly opening-range just above confluent support at 1.2640/65a region defined by the objective 2022 yearly open and the 38.2% retracement of the January advance. A break below this threshold would shift the focus towards the 61.8% retracement at 1.2582 and the yearly low-day close at 1.2514 – losses should not exceed this level IF price is indeed heading higher. A topside breach / close above 1.2767 is needed to mark resumption of the broader uptrend towards the January highs at 1.2813 and the 78.6% retracement at 1.2853- look for a larger reaction there IF reached.

Bottom line: The Canadian Dollar is coiling into the a tight range just above the yearly open – just below Fibonacci resistance. Look to the breakout for guidance in the days ahead. From at trading standpoint, the threat for a larger correction remains while below 1.2767 - we’re looking for a pullback to offer more favorable opportunities closer to uptrend support, ultimately towards new highs in USD/CAD. 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 +2.05 (67.23% of traders are long) – typically bearish reading
  • Long positions are6.74% higher than yesterday and 4.49% lower from last week
  • Short positions are 18.63% lower than yesterday and 20.38% 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.

---

US / Canada Economic Calendar

US / Canada 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.

DISCLOSURES