Canadian Dollar Technical Price Outlook: Near-term Trade Levels

  • Canadian Dollar updated technical trade levels – Daily & Intraday Charts
  • USD/CAD contracts into February opening-range- potential breakout event
  • Resistance 1.2724 (key), 1.2767, 1.2813 – Support 1.2640/64 (key), 1.2582, 1.2514

The US Dollar is off more than 0.50% against the Canadian Dollar since the start of the week with USD/CAD continuing to coil within a well defined technical range. We’re on the lookout for a potential breakout in the days ahead with the late-January rally vulnerable while below the weekly high. These are the updated targets and invalidation levels that matter on the USD/CAD price charts. Review my latest Strategy Webinar for an in-depth breakdown of this Loonie technical setup and more.

Canadian Dollar Price Chart – USD/CAD Daily

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

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

Technical Outlook: In mylast Canadian Dollar Price Outlook we noted that the USD/CAD pullback was, “testing near-term uptrend support here – for now, we’re on the lookout for a possible exhaustion low.” A low was registered that day with price rallying more than 1% before faltering once again at the 61.8% Fibonacci retracement of the December decline at 1.2767. The monthly opening-range is set just above the objective yearly open and the battle-lines have are drawn.

Canadian Dollar Price Chart – USD/CAD 240min

Canadian Dollar Price Chart - USD/CAD 240min - Loonie Trade Outlook - Technical Forecast

Notes: A closer look at Loonie price action shows USD/CAD continuing to contract within the monthly opening-range just above confluent support at 1.2640/65a region defined by the objective 2022 yearly open and the 38.2% retracement of the January advance. A break below this threshold would shift the focus towards the 61.8% retracement at 1.2582 and the yearly low-day close at 1.2514 – losses should not exceed this level IF price is indeed heading higher. A topside breach / close above 1.2767 is needed to mark resumption of the broader uptrend towards the January highs at 1.2813 and the 78.6% retracement at 1.2853– look for a larger reaction there IF reached.

Bottom line: The Canadian Dollar is coiling into the a tight range just above the yearly open – just below Fibonacci resistance. Look to the breakout for guidance in the days ahead. From at trading standpoint, the threat for a larger correction remains while below 1.2767 – we’re looking for a pullback to offer more favorable opportunities closer to uptrend support, ultimately towards new highs in USD/CAD. Review my latest Canadian Dollar Weekly Price Outlook for a closer look at the longer-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

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

  • A summary of IG Client Sentiment shows traders are net-long USD/CAD – the ratio stands at +2.05 (67.23% of traders are long) – typically bearish reading
  • Long positions are6.74% higher than yesterday and 4.49% lower from last week
  • Short positions are 18.63% lower than yesterday and 20.38% 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.

US / Canada Economic Calendar

US / Canada Economic Calendar - Loonie Weekly Event Risk

Economic Calendarlatest economic developments and upcoming event risk.

Active Technical Setups

– Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michael on Twitter @MBForex

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