Canadian Dollar Technical Forecast: USD/CAD Correction Underway
Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels
- Canadian Dollar updated technical trade levels - Weekly Chart
- USD/CAD fails third attempt to breach key resistance fails- correction risk
- Support 1.2784, 1.2688, 1.2640 (critical) – Resistance 1.2975-1.3023 (key), 1.3230, 1.3370
The Canadian Dollar is on the offensive against the US Dollar this week with USD/CAD plummeting more than 1.2%. A third reversal off major technical resistance leaves the broader uptrend vulnerable yet again in the days ahead and the correction may offer more favorable opportunities closer to trend support. 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 my last Canadian Dollar Weekly Technical Forecast we noted that, “USD/CAD is testing a key resistance pivot for third time here and once again the immediate long-bias may be vulnerable while below.” The level in focus was 1.2975-1.3023- a region defined by the objective 2020 yearly open and the 38.2% Fibonacci retracement of the 2020 decline. Price registered an intraweek high at just pips shy of the 100% extension of the 2021 advance at 1.3230 (high registered at 1.3223) but failed to mark a weekly close above. The subsequent reversal has now plunged more than 2.8% with USD/CAD within striking distance of the monthly low.
Initial weekly support rests with the June low-week reversal close at 1.2784 and is backed by the 52-week moving average at 1.2688. Broader bullish invalidation remains unchanged with the lower parallel / objective yearly open at 1.2640. Topside resistance steady at 1.3023 with a breach / weekly close above needed to mark resumption towards 1.3230 and the 2018 high-week close at 1.3370.
Bottom line: USD/CAD is testing a key resistance pivot for third time here and once again the immediate long-bias may be vulnerable while below. From a trading standpoint, a good zone to reduce long-exposure / raise protective stops – losses should be limited to the 1.2784 IF price is heading higher on this stretch. Review my latest Canadian Dollar Shor-term 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 +1.79 (64.11% of traders are long) – typically bearish reading
- Long positions are0.36% lower than yesterday and 39.75% higher from last week
- Short positions are 7.19% higher than yesterday and 21.75% 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.
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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.