Loonie Levels for Looming USD/CAD Breakout

Canadian Dollar Technical Price Outlook: Near-term Trade Levels

  • Canadian Dollar updated technical trade levels – Daily & Intraday Charts
  • USD/CAD carves weekly opening-range just below multi-month trend resistance
  • Key support / bullish invalidation at 1.27– Breach / close above exposes 1.2975

The Canadian Dollar is down more than 0.35% against the US Dollar since the start of the week with USD/CAD testing long-term slope resistance into the February open. Loonie is carving the weekly opening-range just below and we’re looking for a breakout in the days ahead for guidance. These are the updated targets and invalidation levels that matter on the USD/CAD price charts. 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 - Loonie Technical Forecast - USDCAD Trade Outlook

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

Technical Outlook: In last month’s Canadian Dollar Price Outlook we noted that USD/CAD, “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…” Level in focus was 1.2579-1.2619 – a region defined by the 2018 objective yearly open and the 78.6% retracement of the 2017 advance. Loonie tested this threshold in late January before rebounding sharply with the subsequent rally taking out multi-month downtrend resistance last week.

The advance is now testing basic trendline resistance extending off the March 2020 highs – this slope has capped the rally for the past four sessions and a breach / close above is needed to fuel the next leg higher in USD/CAD. Daily support rests with 61.8% Fibonacci retracement / yearly open at 1.2700/13 – losses should be capped by this zone IF price is indeed heading higher.

Canadian Dollar Price Chart – USD/CAD 120min

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

Notes: A closer look at Loonie price action shows USD/CAD trading within the confines of an ascending pitchfork formation extending off the January lows with the weekly opening-range taking shape just below the March trendline. Weekly open support rests at 1.2782 backed by 1.2735 & the 1.27-handle- both zone of interest for possible downside exhaustion. A topside breach keeps the focus on the November lows at 1.2928 backed by the 2020 yearly open / the September lows at 1.2975/94– look for a larger reaction there IF reached.

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Bottom line: The Canadian Dollar has carved a weekly opening-range just below long-term downtrend resistance and we’re looking for inflection here. From at trading standpoint, look for downside exhaustion ahead of 1.27 with a breach / close above 1.2975/94 needed to suggest a more significant low is in place. 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 +1.75 (63.70% of traders are long) – typically bearish reading
  • Long positions are4.26% lower than yesterday and 0.52% lower from last week
  • Short positions are 14.74% higher than yesterday and 19.56% 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 less net-long than yesterday but more net-long from last week. 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 -8% 0% -5%
Weekly -6% -17% -11%

Key US / Canada Data Releases

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

Economic Calendarlatest economic developments and upcoming event risk.

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– 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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