Canadian Dollar Technical Forecast: USD/CAD Surges into First Hurdle
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Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels
- Canadian Dollar updated technical trade levels - Weekly Chart
- USD/CAD rally extends into week seven- key resistance pivot in focus
- Support ~1.29, 1.2814, 1.2749 (critical) – Resistance 1.2975-1.3023 (key), 1.3230, 1.3370
The Canadian Dollar is off more than 0.60% against the US Dollar this week with USD/CAD attempting a seventh consecutive weekly rally. While a breach of the yearly opening-range does keep the broader focus higher, the immediate advance may be vulnerable as the bulls extend into the first major resistance zone. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical price chart. 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
Notes: In last month’s Canadian Dollar Weekly Technical Forecast we noted that USD/CAD was, “USD/CAD is building on a rebound off pitchfork support – the focus is on this stretch back towards key resistance near the yearly high-closes.” We were looking for possible price inflection into 1.2749-1.2814 – and we got it! A topside breach led the charge towards key resistance at the 2020 yearly open / 38.2% Fibonacci retracement of the 2020 decline at 1.2975-1.3023- looking for a reaction here this week.
Initial support now rests with the median-line (currently ~1.29) backed by the 2021 high-week close at 1.2814. Bullish invalidation now raised to the March high-week close at 1.2749- losses should not surpass this threshold IF price is heading higher on this stretch. A topside breach from here exposes the 100% extension at 1.3230 backed by the 2018 high-week close at 1.3370- an area of interest for possible price inflection IF reached.
Bottom line: The USD/CAD breakout has extended into a key inflection zone and we’re looking for a reaction here- watch the weekly close. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – look for a push / close above the 75% parallel to keep this immediate advance viable. Ultimately, a larger pullback may offer more favorable opportunities closer to uptrend support. 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-short USD/CAD - the ratio stands at -1.19 (45.62% of traders are long) – typically neutral reading
- Long positions are3.53% higher than yesterday and 15.45% higher from last week
- Short positions are 5.38% higher than yesterday and 6.75% higher from last week
- We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/CAD prices may continue to rise. Traders are more net-short than yesterday but less net-short 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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--- Written by Michael Boutros, Technical Strategist with DailyFX
Follow Michael on Twitter @MBForex
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.