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Canadian Dollar Technical Forecast: USD/CAD Thrusts into Resistance

Canadian Dollar Technical Forecast: USD/CAD Thrusts into Resistance

Michael Boutros, Strategist

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

  • Canadian Dollar updated technical trade levels - Weekly Chart
  • USD/CAD two-week rally from uptrend support into resistance
  • Support 1.2784, 1.2700 (critical), 1.2546 – Resistance 1.2975-1.3023 (key), 1.3120, 1.3230
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The Canadian Dollar slipped more than 1.2% against the US Dollar this week with USD/CAD surging back into a critical resistance pivot on the heels of a 75 basis point hike from the FOMC. While the broader outlook remains constructive, the immediate advance may be vulnerable while below this threshold and we’re on the lookout for possible price inflection here this week. 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

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

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

Notes: In my last Canadian Dollar Weekly Technical Forecast we noted that the, “USD/CAD reversal off uptrend resistance is now eyeing a drop into uptrend support- looking for possible price inflection a bit lower.” Our focus was on confluent uptrend, “support around the 78.6% retracement at 1.2546- looking for a larger reaction there IF reached.” Price briefly registered an intra-week low at 1.2517 the following week before marking an outside-weekly reversal higher- that rally takes USD/CAD back into critical resistance we’ve been tracking since the start of the year at the 2020 yearly open / 38.2% Fibonacci retracement of the 2020 decline at 1.2975-1.3023. Once again, we’re on the lookout for possible price inflection here.

Initial weekly support now rests with the June 6th weekly reversal close at 1.2784 and the 61.8% retracement at the 1.27-handle- we’ll reserve this threshold as our medium-term bullish invalidation level. A topside breach / close above 1.3023 is needed to validate resumption of the broader uptrend with such a scenario exposing subsequent resistance objectives at the 75% parallel (currently ~1.3120) and the 100% extension of the 2021 advance at 1.3230- look for a larger reaction there IF reached.

Bottom line: USD/CAD is testing a key resistance pivot here– risk for inflection into this region. From at trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops – losses should be limited to 1.27 IF price is indeed heading higher on this stretch with a weekly close above 1.3023 needed to mark resumption of the broader uptrend. I’ll publish and 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

Canadian Dollar Trader Sentiment - USD/CAD Price Chart - Loonie Retail Positioning - USDCAD Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-short USD/CAD - the ratio stands at -1.35 (42.64% of traders are long) – typically weak bullish reading
  • Long positions are11.90% lower than yesterday and 52.16% lower from last week
  • Short positions are 3.46% higher than yesterday and 73.64% 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 further net-short than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger USD/CAD-bullish contrarian trading bias from a sentiment standpoint.

US / Canada Economic Calendar

US / Canada Economic Calendar - USD/CAD Key Data Releases - Loonie Weekly Event Risk

Economic Calendar - latest economic developments and upcoming event risk.

Active Weekly Technical Charts

--- 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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