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Canadian Dollar Technical Outlook: USD/CAD Backs into Uptrend Support

Canadian Dollar Technical Outlook: USD/CAD Backs into Uptrend Support

Michael Boutros, Strategist

Canadian Dollar Technical Price Outlook: Near-term Trade Levels

  • Canadian Dollar updated technical trade levels – Daily & Intraday Charts
  • USD/CAD pullback now testing uptrend support- risk for near-term price inflection
  • Resistance 1.29, 1.2968 (critical), 1.3125- Support 1.2794-1.2819 (key), 1.2640/76, 1.2503
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The Canadian Dollar counter-offensive against the US Dollar took a leg higher this week with USD/CAD off more than 0.5% after turning from uptrend resistance. The pullback takes price back into uptrend support and we’re looking for possible price inflection here for guidance. These are the updated targets and invalidation levels that matter on the USD/CAD technical price charts. Review my latest Strategy Webinar for an in-depth breakdown of this Loonie setup and more.

Canadian Dollar Price Chart – USD/CAD 240min

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

Chart Prepared by Michael Boutros, Technical Strategist; USD/CAD on Tradingview

Technical Outlook: In my last Canadian Dollar Price Outlook we noted that USD/CAD was, “pressing uptrend resistance here and while the broader focus remains weighted to the topside- we’re on the lookout for possible inflection into the upper parallel.” A final test of slope resistance failed later that day with USD/CAD plummeting nearly 2% into confluent uptrend support here 1.2793-1.2819- a region defined by the 38.2% Fibonacci retracement of the April rally and the 100% extension of the decline off the monthly high. Looking for possible inflection here.

A break lower would threaten a larger correction towards the next major support zone at the April opening-range highs / 61.8% retracement / 2022 yearly open at 1.2640/76. Initial resistance now 1.29 backed by the 2019 low / 61.8% retracement at 1.2951/68. Ultimately a breach / close above the median-line would be needed to mark resumption of the broader uptrend.

Bottom line: USD/CAD is now testing uptrend support and we’re looking for a reaction here. From a trading standpoint, a good zone to reduce short-exposure / lower protective stops – rallies should be capped by 1.2968 IF price is indeed heading lower on this stretch. 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 - USDCAD Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long USD/CAD - the ratio stands at +1.25 (55.62% of traders are long) – typically weak bearish reading
  • Long positions are10.23% higher than yesterday and 45.21% higher from last week
  • Short positions are 1.04% higher than yesterday and 3.97% 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.

Active Technical Setups

- 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.

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