September 15, 2022
  • September 15, 2022

USD/CAD rally stops at resistance

By on April 28, 2022 0

Canadian Dollar Technical Price Outlook: Short-Term Trading Levels

  • Canadian dollar Updated Technical Trading Levels – Daily and Intraday Charts
  • USD/CAD Breakout Reacts to Uptrend Resistance – Near Term Exhaustion Risk
  • Resistance 1.2880-1.29 (key), 1.2938, 1.2951/75- Support 1.2719, 1.2676/97, 1.2640 (critical)

the American dollars jumped more than 1.2% against the Canadian dollar at the extremes this week, with USD/CAD attempting a fifth straight weekly advance. The rally is bringing the price into the technical resistance of the uptrend and while the broader outlook remains constructive, the immediate rally could be vulnerable in the days ahead. It’s the updated targets and invalidation levels that count on the USD/BODY price charts as May approaches. 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 my last Canadian Dollar Price Outlook we highlighted that a short-term breakout kept the focus higher on USD/CAD while noting that, “losses should be limited at the monthly open at 1.2503 IF price heads higher with a breach exposing upper targets towards yearly range highs. Price briefly recorded an intraday low at 1.2458 (nearest low was 1.2494!) before reversing sharply with a break in April price action. aperture range bring the USDCAD back into resistance at the yearly highs – now is the time to make a decision.

Canadian dollar rate chart – USD/CAD 120min

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

Remarks: A closer look at the Loonie’s price action shows USD/CAD continue to trade within the confines of an ascending market fork formation extending from the April lows with the upper parallel highlighting the turn of key resistance today at 1.2880-1.29– a region defined by the yearly close of the highest day and the 1.618% Fibonacci extension. Risk of short-term burnout here.

Initial Support rests on the midline / weekly open at 1.2719 supported by 1.2676/97– losses should be limited to this region IF the price goes up on this stretch. Wider bullish invalidation now brought to the annual target open to 1.2640. A breach up from here lets focus on what’s next rresistance objectives at the annual closing on the highest day at 1.2938 closely supported by the 2019 low / 2020 yearly open at 1.2951/75– look for a bigger reaction there IF achieved.

At the end of the line : The breakout in USD/CAD responded to uptrend resistance and immediate upside may be vulnerable in the days ahead. From a trading perspective, pullbacks should be limited to 1.2676 IF price heads higher on this stretch with an upper break above the 1.29 handle exposing new yearly highs. Keep in mind that we are heading into the end of the month with US Personal Consumption Core (PCE) on tap tomorrow and the FOMC and Nonfarm Payrolls (NFP) on tap next week. Stay nimble here until the May opening. 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, see his Fundamentals of Technical Analysis Series on Bbuild a Jrading Sstrategy

Canadian Dollar Traders Sentiment – USD/CAD Price Chart

Canadian Dollar Traders Sentiment - USD/CAD Price Chart - Loonie Retail Positioning - USDCAD Technical Forecast

  • A summary of IG Customer Sentiment shows traders are net-short USD/CAD – the ratio stands at -1.22 (45.14% of traders are long) – generally low bullish reading
  • Long positions are9.84% less than yesterday and 46.87% less than last week
  • Short positions are 1.20% more than yesterday and 27.79% more than last week
  • We generally take a contrarian view of crowd sentiment, and the fact that traders are net short suggests that USD/CAD prices may continue to rise. Traders are even sharper than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger USD/CAD bullish contrarian trading bias by one feeling point of view.

US and Canada economic calendar

US/Canada Economic Calendar - USD/CAD Key Data Releases - Loonie Weekly Event Risk

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

Active technical configurations

– Written by Michel BoutrosTechnical Strategist at DailyFX

To follow MIchael on Twitter @MBForex

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