USD/CAD BoC Breakdown– Loonie Levels

Canadian Dollar Technical Price Outlook: Near-term Trade Levels

  • Canadian Dollar updated technical trade levels – Daily & Intraday Charts
  • USD/CAD carves monthly opening-range above key lateral support
  • Key resistance at 1.2782– Break / close below 1.2579 needed to mark trend resumption

The Canadian Dollar is up more than 1% against the US Dollar since the start of the week with USD/CAD pressing the lower bounds of a multi-week range in price. While the broader downtrend remains intact, the immediate decline may be vulnerable here near-term as Loonie tests major technical support. These are the updated targets and invalidation levels that matter on the USD/CAD price charts heading into the close of the year. Review my latest Strategy Webinarfor an in-depth breakdown of this Loonie technical setup and more.

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Canadian Dollar Price Chart – USD/CAD Daily

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

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

Technical Outlook: In my last Canadian Dollar Price Outlook we noted that the USD/CAD recovery was approaching down trend resistance with a, “close below 1.2782 would be needed to threaten another run at the lows.” A breakdown into the close of the year fueled a decline into a key support zone we’ve been tracking for months now at 1.2579-1.2647– a region defined by the 2018 objective yearly open and the 78.6% Fibonacci retracement of the 2017 advance. Note that the January opening-range lows also converge on this threshold – we’re looking for inflection in the days ahead for guidance here.

A break / close below is needed to mark resumption of the broader down trend towards the 25% parallel near the 1.25-handle and 1.2450. Critical long-term support rests lower at the 2018 low-day close / lower parallels at 1.2312. Resistance / bearish invalidation now lowered to the October 2018 low at 1.2782 – a breach / close above this pitchfork would be needed to suggest a more significant reversal is underway.

Canadian Dollar Price Chart – USD/CAD 240min

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

Notes: A closer look at Loonie price action shows USD/CAD testing the median-line today with a multi-week range taking shape just above this near-term support zone. Look for topside exhaustion ahead of weekly open resistance at 1.2727 IF price is indeed heading lower with a break likely to fuel accelerated losses towards the lower parallels.

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Bottom line: The Canadian Dollar has carved out a well-defined monthly opening-range just above major lateral support. From a trading standpoint, a good zone to reduce short-exposure / lower protective stops – look for inflection here with a close below needed to keep the immediate decline viable. 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 Trade Outlook - Technical Forecast

  • A summary of IG Client Sentiment shows traders are net-long USD/CAD – the ratio stands at +1.85 (64.90% of traders are long) – typically bearish reading
  • Long positions are2.89% higher than yesterday and 2.22% higher from last week
  • Short positions are 6.81% lower than yesterday and 16.48% higher 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 more net-long than yesterday but less net-long from last week and the combination of current positioning and recent changes gives us a further mixed USD/CAD trading bias from a sentiment standpoint.

of clients are net long.

of clients are net short.

Change in Longs Shorts OI
Daily 16% -43% -7%
Weekly 17% -27% 2%

Key US / Canada Data Releases

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

Economic Calendarlatest economic developments and upcoming event risk.

Active Technical Setups

– Written by Michael Boutros, Currency Strategist with Finance Prop

Follow Michael on Twitter @MBForex

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By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

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