Canadian Dollar Technical Forecast: USD/CAD Breakout Imminent

Canadian Dollar Technical Forecast: USD/CAD Weekly Trade Levels

• Canadian Dollar updated technical trade levels – Weekly Chart
• USD/CAD carves August opening-range just below resistance- breakout pending
• Support 1.2784, 1.2716, 1.2640 (critical) – Resistance 1.2975-1.3023 (key), 1.3230, 1.3370

The Canadian Dollar offensive against the US Dollar resumed this week with USD/CAD plummeting more than 0.6% into the weekly open. The move keeps price within a well-defined monthly opening-range and while we remained poised for the breakout, the technical threat remains for a test of uptrend support before resumption of the broader US Dollar rally. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical price chart. Review my latest Weekly Strategy Webinar for an in-depth breakdown of this Loonie technical setup and more.

Canadian Dollar Price Chart – USD/CAD Weekly

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

Notes: In last month’s Canadian Dollar Weekly Technical Forecast we noted that USD/CAD was, “testing a key resistance pivot for third time here and once again the immediate long-bias may be vulnerable while below.” Price turned from key resistance at 1.2975-1.3023 that week with the decline marking an outside-weekly reversal last week off support at the June low-week close at 1.2784. The immediate focus is on a breakout of the August opening-range for guidance with the threat remaining for a deeper correction within the broader uptrend.

A break lower from here would expose key support objectives at the 52-week moving average / 61.8% Fibonacci retracement of the yearly range at 1.2709/16 and the lower parallel / objective yearly open at ~1.2640– both levels of interest for possible downside exhaustion / price inflection IF reached. Critical resistance remains at the median-line where the objective 2020 yearly open converges on the 38.2% Fibonacci retracement of the 2020 decline around 1.2975-1.3023– a breach / weekly close above this threshold is needed to mark resumption of the broader uptrend towards 1.3230.

Bottom line: USD/CAD has carved a well-defined monthly opening-range between key technical levels and we’re looking for the breakout. From at trading standpoint, the focus is on 1.2784-1.3023 for medium-term guidance – ultimately a broader pullback may offer more favorable opportunities closer to support with a breach /close above the median-line needed to mark resumption of the broader uptrend. Review my latest Canadian Dollar Shor-term Price Outlook for 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

• A summary of IG Client Sentiment shows traders are net-long USD/CAD – the ratio stands at +1.66 (62.42% of traders are long) – typically bearish reading
• Long positions are21.41% higher than yesterday and 8.39% higher from last week
• Short positions are 17.65% lower than yesterday and 22.87% 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.

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— Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex