Canadian Dollar Technical Outlook: USD/CAD Rally Pushing Seven Weeks

CANADIAN DOLLAR TECHNICAL PRICE OUTLOOK: NEAR-TERM TRADE LEVELS

  • Canadian Dollar updated technical trade levels – Daily & Intraday Charts
  • USD/CAD rally rips into uptrend resistance- risk for near-term inflection
  • Resistance 1.3125, 1.3230 (critical), 1.3370- Support 1.2952, 1.2880-1.29 (key), ~1.2815

The US Dollar surged more than 1.18% against the Canadian Dollar with USD/CAD attempting to mark a seventh consecutive weekly advance. The rally is now testing uptrend resistance and the focus is on possible price inflection up 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 DAILY

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

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

Technical Outlook: In last month’s Canadian Dollar Price Outlook we noted that USD/CAD was probing resistance at the March highs while noting that, “pullbacks should be limited to 1.2676 IF price is heading higher on this stretch with a topside breach above the 1.29-handle exposing fresh yearly highs.” Price plunged into the May open with USD/CAD registering a low at 1.2713 before reversing sharply higher. The rally is now attempting to breach the 38.2% Fibonacci retracement of the 2020 decline at 1.3023– a close above this threshold leaves the door open for further gains towards the upper parallel.

CANADIAN DOLLAR PRICE CHART – USD/CAD 240MIN

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

Notes: A closer look at Loonie price action shows USD/CAD continuing to trade within the confines of the ascending pitchfork formation extending off the April lows. Note that price has been riding the upper parallel here all week- ultimately a topside breach exposes the March 2018 swing highs at 1.3125 and key resistance at the 100% extension of the 2021 advance at 1.3230– look for a larger reaction there IF reached. Initial support at the 2019 low at 1.2951 backed by the 2020 high-day close / 1.618% extension at 1.2880-1.29. Broader bullish invalidation now raised to the lower parallel / 38.2% retracement near ~1.2815.

Bottom line: USD/CAD is 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. From a trading standpoint, a good zone to reduce portions of long-exposure / raise protective stops- losses should be limited to 1.2880 IF price is heading higher on this stretch with the next major level up at 1.3230. 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 - Technical Outlook

  • A summary of IG Client Sentiment shows traders are net-short USD/CAD – the ratio stands at -1.37 (42.12% of traders are long) – typically weak bullish reading
  • Long positions are5.69% higher than yesterday and 14.94% lower from last week
  • Short positions are 20.35% higher than yesterday and 39.37% 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.

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