September 15, 2022
  • September 15, 2022

Canadian Dollar Technical Outlook: USD/CAD crashes into support

By on March 3, 2022 0

Canadian Dollar Technical Price Outlook: Short-Term Trading Levels

  • Canadian dollar Updated Technical Trading Levels – Daily and Intraday Charts
  • USD/CAD Tries to Break Multi-Week Range Lows – Vulnerable Recovery Below Weekly Open
  • Resistance 1.2705, 1.2766 (key) – Support 1.2613/40 (key), 1.2514

the American dollars is down more than 0.20% against the Canadian dollar since the start of the week, with USD/CAD threatening a break below a multi-week range. All eyes are on tomorrow’s U.S. Nonfarm Payrolls (NFP) report as we seek to validate this price drop. It’s the updated targets and invalidation levels that count on the USD/BODY price grids. Review my last Strategy Webinar for an in-depth analysis of this technical Loonie setup and more.

Canadian Dollar Price Chart – Daily USD/CAD

Chart prepared by Michel Boutrostechnical strategist; USD/CAD on Tradingview

Technical outlook: In mylast Canadian Dollar Price Outlook we noted that the USD/CAD was, “wrapping in a narrow range just above the yearly open – just below Fibonacci rresistance. Watch the breakout for guidance in the days ahead. What happened in the following days was extraordinary with USD/CAD crossing the monthly range highs before reversing sharply to close February near the range lows.

Another attempt to break and close below the yearly open materialized yesterday, but once again the price has reversed sharply from the lows – what is that? this nonsense? Clearly, the continued rally in oil and a deluge of war headlines have fueled heightened volatility and despite the seesaw price action, key technical levels remain unchanged. This “elastic” price action highlights the possibility of a larger breakout actually occurring. Patience pays here.

Canadian dollar rate chart – USD/CAD 120min

Canadian Dollar Price Chart - USD/CAD 120min Loonie Trade Outlook - Technical Forecast

Remarks: A closer look at the Loonie’s price action shows USD/CAD trading in a short-term descending channel from weekly highs with the lower parallel (red) further highlighting critical Support at 1.2613/40– a region defined by the 61.8% Fibonacci retracement of the January rally, the 100% extension of the late February decline and the 2020 yearly open. A break/close below this threshold is needed to fuel the next leg down towards trend support longer-term bullish / the yearly close of the day low at 1.2514– look for a broader answer if reached. Initial resistance is now seen at the February open at 1.2705 supported by the weekly open/61.8% retracement of the recent decline to 1.2761/66– a weekly break/close above this threshold is needed to suggest that a more meaningful low is in place with such a scenario exposing the January highs at 1.2813 and another key Fibonacci confluence at 1.2850/53.

At the end of the line : The Canadian Dollar has attempted breakouts on both sides of this multi-week range and we are looking for indications for the end of the week/NFP tomorrow. From a trading standpoint, rallies should be capped at 1.2766 IF price indeed heads lower on this pullback with a pause keeping focus on the yearly close of the day low (zone of interest for a possible exhaustion). Ultimately, we are looking to validate a bottom in the days ahead to keep the broader uptrend of 2021 viable. Review my latest Canadian Dollar Weekly Price Outlook for a closer look at the longer term technical trading levels of USD/CAD.

For a full analysis of Michael’s trading strategy, check out his Fundamentals of Technical Analysis Series on Bbuild a Jrading Sstrategy

Canadian Dollar Traders Sentiment – USD/CAD Price Chart

Canadian Dollar Trader Seniment - USD/CAD Price Chart - Loonie Retail Positioning - Technical Outlook

  • A summary of IG Customer Sentiment shows traders are net long USD/CAD – the ratio stands at +1.72 (63.20% of traders are long) – generally bearish reading
  • Long positions are8.31% more than yesterday and 25.05% more than last week
  • Short positions are 7.46% less than yesterday and 22.34% less than last week
  • We generally take a contrarian view of crowd sentiment, and the fact that traders are net buyers suggests that USD/CAD prices may continue lower. Traders are sharper than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger contrarian USD/CAD-bearish trading bias from a feeling point of view.

US and Canada economic calendar

US/Canada Economic Calendar - USD/CAD Weekly Event Risk - NFP, Core Inflation at your Fingertips

Economic calendarthe latest economic developments and the risks associated with future events.

Active technical configurations

– Written by Michel BoutrosCurrency Strategist at DailyFX

To follow MIchael on Twitter @MBForex

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