The Canadian Dollar is virtually unchanged against the US Dollar for the week as price continues to narrow within the confines of the larger consolidation pattern we’ve been tracking. These are the updated targets and invalidation levels that matter on the USD/CAD charts into the close of the week.
USD/CAD DAILY PRICE CHART
(Click on image to enlarge)
Technical Outlook: In my latest USD/CADWeekly Technical Outlook we noted that price has continued to consolidate just below a critical resistance confluence at 1.3435/37–a region defined by the 61.8% retracement of the 2019 range and the 2017 yearly open. Note that the March trendline also converges on this zone and further highlights its technical significance.
Interim support rests with the March 19th trendline (currently ~1.33) with broader bullish invalidation eyed at 1.3234/48 – a break / close below this threshold would be needed to validate the turn targeting the 200DMA at 1.3195. A topside breach of the formation exposes subsequent resistance objectives at the March highs at 1.3467 backed by the 78.6% retracement at 1.3537.
USD/CAD 120MIN PRICE CHART
(Click on image to enlarge)
Notes: A closer look at Loonie price action shows USD/CAD trading within the confines of a near-term ascending pitchfork formation with the recent advance testing confluence resistance today at 1.3384/87 – where the weekly open, the weekly opening-range highs and the 61.8% retracement converge on the median line. A topside breach above this pivot zone would once again target key resistance at 1.3435/37- look for a bigger reaction there IF reached. Initial support rests at 1.3360 backed by 1.3327 – an area of interest for possible price exhaustion.
Bottom line: The Canadian Dollar largely remains within the confines of a broader consolidation pattern just below key resistance with the weekly opening-range still intact heading into Friday. From a trading standpoint, the near-term risk remains weighted to the long-side while above 1.3327 but ultimately, we’re looking for a break of the 1.3298-1.3437 range for guidance.
USD/CAD TRADER SENTIMENT
- A summary of IG Client Sentiment shows traders are net-short USD/CAD- the ratio stands at -1.51 (39.9% of traders are long) – bullish reading
- Long positions are14.4% lower than yesterday and 5.0% lower from last week
- Short positions are 10.4% higher than yesterday and unchanged 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 sentiment and recent changes gives us a stronger USD/CAD-bullish contrarian trading bias.
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