Skip to content
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 Short-term Price Outlook: USD/CAD Rebound Faces NFP

Canadian Dollar Short-term Price Outlook: USD/CAD Rebound Faces NFP

Michael Boutros, Strategist

Canadian Dollar Technical Price Outlook: Short-term Trade Levels

  • Canadian Dollar updated technical trade levels – Daily & Intraday Charts
  • USD/CAD rebound off downtrend support threatens larger recovery- key Jobs data on tap
  • Resistance 1.2938/51, 1.3025, 1.3076 (key)- Support 1.2784, 1.2716 (key), 1.2640
Advertisement

The Canadian Dollar has been on defense against the US Dollar since the start of the month with USD/CAD rebounding more than 0.8% off downtrend support. The focus shifts to this recovery heading into key employment data tomorrow from the US & Canada with a well-defined weekly opening-range now in view ahead of the releases. 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 Daily

Canadian Dollar Price Chart - USD/CAD Daily - Loonie Short-term Trade Outlook - USDCAD Technical Forecast

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

Technical Outlook: In last month’s Canadian Dollar Short-term Price Outlook, we noted that USD/CAD had, “plunged into support at the July open / monthly low – looking for inflection here.” The dollar continued to grind lower into the July close before rebounding off the June low-week reversal close / 25% parallel at ~1.2784. The focus is on this early month recovery heading into major event risk tomorrow with US Non-Farm Payrolls and Canada employment on tap.

Canadian Dollar Price Chart – USD/CAD 240min

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

Notes: A closer look at Loonie price action shows USD/CAD trading within the confines of a descending pitchfork formation extending off the July high with price testing the median-line as resistance early in the week. A topside breach would threaten a larger recovery towards initial resistance at the 2021 high-day close / 2019 low at 1.2939/52 backed by the July 15th reversal close at 1.3025. Broader bearish invalidation now lowered to the May high at 1.3076- a close above this threshold would be needed to mark resumption of the broader uptrend.

A break lower from here keeps the focus on subsequent support objectives at the 61.8% Fibonacci retracement of the yearly range at 1.2716- look for a larger reaction there IF reached with a close below needed to keep the medium-term short-bias viable towards the objective 2022 yearly open at 1.2640.

Bottom line: USD/CAD has rebounded off downtrend support with the recovery now testing the median-line ahead of major event risk. From at trading standpoint, the focus is on a breakout of the weekly opening-range for guidance with the threat for a larger recovery within the downtrend. Stay nimble early in the month- likely to get some volatility here. 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 Short-term Technical Outlook
  • A summary of IG Client Sentiment shows traders are net-long USD/CAD - the ratio stands at +1.20 (54.55% of traders are long) – typically weak bearish reading
  • Long positions are2.73% lower than yesterday and 3.53% higher from last week
  • Short positions are 7.24% higher than yesterday and 5.33% higher 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. Yet traders are less net-long than yesterday and compared with last week. From a sentiment standpoint, the recent changes in positioning warn that the current USD/CAD price trend may soon reverse higher despite the fact traders remain net-long.

US / Canada Economic Calendar

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

Economic Calendar - latest economic developments and upcoming event risk

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.

DISCLOSURES