Canadian Dollar Forecast: USD/CAD Recovery Faces Pivotal Resistance

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

  • Canadian Dollarupdated technical trade levels – Weekly Chart
  • USD/CAD recovery testing initial resistance hurdles into November open
  • Weekly support 1.2314 (key), 1.22 – Resistance 1.2460, 1.27 (bearish invalidation)

The Canadian Dollar was on the defensive against the US Dollar for a third consecutive week with USD/CAD up more 0.55% ahead of the New York close on Friday. The advance takes price into a major technical pivot zone and we’re looking for possible price inflection off this threshold for guidance in the weeks ahead. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical price chart heading into the November open. Review my latest Strategy Webinar for an in-depth breakdown of this Loonie technical setup and more.

Canadian Dollar Price Chart – USD/CAD Weekly

Canadian Dollar Forecast: USD/CAD Recovery Faces Pivotal Resistance

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

Notes:In my last Canadian Dollar Weekly Price Outlook we noted that, “USD/CAD has been testing downtrend support for two weeks now and while the broader threat remains lower, a relief rally into the November open may be on the cards.” Price has rallied more than 1.4% off the lows with the recovery now approaching the first resistance hurdle at 1.2460/62– a region defined by the 2016 low and the 100% extension of the August decline. A breach / weekly close above this threshold is needed to fuel the next leg higher towards the 52-week moving average / slope resistance at ~1.2555/80.

Support remains steady at the highlighted confluence zone around the 2018 low-close at 1.2314. A close below this threshold would threaten another bout of accelerated losses for the greenback with such a scenario exposing the 1.618% Fibonacci extension of the August decline / 78.6% retracement of the yearly range at 1.2194-1.2208 look for a larger reaction there IF reached.

Bottom line: The focus is on this USD/CAD recovery as price approaches the first major resistance hurdle. From a trading standpoint, a good zone o reduce long-exposure / raise protective stops – pullbacks should be limited to the weekly / monthly open at 1.2378IF price is indeed heading higher with a topside breach / close above resistance needed to keep the immediate rebound viable. Review my latest Canadian Dollar Price Outlookfor 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

Canadian Dollar Forecast: USD/CAD Recovery Faces Pivotal Resistance

  • A summary of IG Client Sentiment shows traders are net-long USD/CAD – the ratio stands at +2.52 (71.56% of traders are long) – typically bearish reading
  • Long positions are8.32% lower than yesterday and 3.94% lower from last week
  • Short positions are 9.52% higher than yesterday and 8.23% 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.

US / Canada Economic Calendar

Canadian Dollar Forecast: USD/CAD Recovery Faces Pivotal Resistance

Economic Calendarlatest economic developments and upcoming event risk.

Active Weekly Technical Charts

— Written by Michael Boutros, Technical Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

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