Canadian Dollar Weekly Price Outlook: USD/CAD Breakdown Targets

In this series we scale-back and look at the broader technical picture to gain a bit more perspective on where we are in trend. The Canadian Dollar has rallied more than 3.1% against the US Dollar since the start of the year with USD/CAD reversing sharply from a critical resistance barrier we’re been tracking. Here are the key targets & invalidation levels that matter on the USD/CAD weekly chart into the start of the year.

USD/CAD WEEKLY PRICE CHART

(Click on image to enlarge)

USD/CAD Weekly Price Chart

Notes: In last month’s Canadian Dollar Weekly Technical Outlook we noted that USD/CAD was testing a, “major confluence resistance zone at the 61.8% retracement of the 2016 decline / 2017 high-week close at 1.3647/86.” Price registered a high at 1.3364 before posting an outside-week reversal with the decline breaking below the October trendline.

Price has already covered 50% of the recent advance with and the 2018 RSI support trigger now being tested. Although we could see some relief near-term, the broader focus remains weighted to the downside while below the 2017 open at 1.3435 with subsequent support objectives eyed at the 61.8% retracement at 1.3119 and the highlighted slope / moving average confluence zone around 1.3000/30- levels of interest for possible price exhaustion.

Bottom line: USD/CAD has broken below medium-term uptrend support after rebounding off critical resistance last week and leaves the risk for further losses in price. We’ll continue to favor fading strength while below 1.3435 – Ultimately, a larger pullback may offer more favorable long-entries closer to the lower parallels. I’ll publish an updated USD/CAD technical outlook once we get further clarity on near-term price action.

USD/CAD TRADER SENTIMENT

USD/CAD Trader Sentiment

  • A summary of IG Client Sentiment shows traders are net-short USD/CAD - the ratio stands at -1.18 (45.9% of traders are long) – weak bullish reading
  • Traders have remained net-short since October 9th; price has moved 2.1% higher since then
  • Long positions are 13.5% higher than yesterday and 223.8% higher from last week
  • Short positions are 11.9% lower than yesterday and 40.9% lower 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. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/CAD price trend may soon reverse lower despite the fact traders remain net-short.

Disclosure: Do you want to see how retail traders are currently trading the US Dollar? Check out our IG Client Sentiment ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.