Canadian Dollar Price Outlook: USD/CAD Reversal Slams into Support

CANADIAN DOLLAR TECHNICAL PRICE OUTLOOK: SHORT-TERM TRADE LEVELS

  • Canadian Dollar updated technical trade levels – Daily & Intraday Charts
  • USD/CAD July range-reversal now testing support at monthly lows- inflection risk
  • Resistance 1.2938/51, 1.3015 (key), 1.3076- Support 1.2859/72 (key), 1.2740s, 1.2703/16

The Canadian Dollar surged more than 1% against US Dollar with USD/CAD plunging nearly 2.8% off the yearly high in just five days. The decline takes Loonie towards support at the July open / range lows and the focus is on possible price inflection just lower. 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: A breakout of the July opening-range on July 14th turned just pips ahead of the 100% extension of the 2021 advance at 1.3230 with the post-BoC reversal nearly taking out the entire monthly range on a straight shot lower. The immediate focus is on a reaction down here with a break / daily close below the monthly low-day close at 1.2859 needed to suggest a larger correction may be underway here.

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 median-line formation extending off the June / July highs. A rebound off confluent support at the 25% parallel / monthly low-day close / July open at 1.2859/72 is offering a brief reprieve here and the focus is on a inflection off this zone. Initial resistance now back at the 2021 high-day close / 2019 low at 1.2938/51 backed by the weekly open at 1.3015 and the May high a t 1.3076. Ultimately a breach / close above the yearly high-day close at 1.3116 is needed to mark resumption of the broader uptrend. A break lower from here could fuel another accelerated bout of losses for the greenback with such a scenario exposing subsequent support objectives the lower parallel (currently 1.2740s) and the 200-day moving average / 61.8% Fibonacci retracement of the yearly range at 1.2703/16– look for a larger reaction there IF reached.

Bottom line: USD/CAD has plunged into support at the July open / monthly low – looking for inflection here. From a trading standpoint, a good zone reduce portions of short-exposure / lower protective stops – rallies should be capped by the weekly open IF price is heading lower on this stretch with a break / close below the July range needed to keep the immediate short-bias viable. 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 +1.72 (63.17% of traders are long) – typically bearish reading
  • Long positions are29.44% higher than yesterday and 42.05% higher from last week
  • Short positions are 13.17% lower than yesterday and 39.40% 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.

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 TECHNICAL SETUPS

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