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Canadian Dollar Outlook: USD/CAD Inflection off Key Fibonacci Support

Canadian Dollar Outlook: USD/CAD Inflection off Key Fibonacci Support

2020-09-15 15:30:00
Michael Boutros, Strategist
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Canadian Dollar Technical Price Outlook: USD/CAD Weekly Trade Levels

  • Canadian Dollarupdated technical trade levels - Weekly Chart
  • USD/CAD rebounds off key technical support confluence at 1.3057
  • Resistance now 1.3364 – Break lower exposes 1.2952

The Canadian Dollar snapped an eight-week winning streak against the US Dollar last week with USD/CAD rebounding off technical support into the September open. A relief rally in the greenback may offer a larger recovery here but the broader risk remains weighted to the downside after breaking below multi-year uptrend support last month. These are the updated targets and invalidation levels that matter on the USD/CAD weekly technical price chart. Review my latest Strategy Webinar for an in-depth breakdown of this Loonie technical setup and more.

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Canadian Dollar Price Chart – USD/CAD Weekly

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

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

Notes: In last month’s Canadian Dollar Weekly Price Outlook we noted that a five-week decline had taken USD/CAD into multi-year uptrend support and to be the lookout, “for topside exhaustion ahead of 1.3515 IF price is indeed heading lower.” Loonie continued to its’ advance into the close of August before rebounding off confluence support at with USD/CAD up nearly 1% since the start of September.

The support zone in focus is 1.5057- a level defined by the 61.8% Fibonacci retracement of the entire 2017 advance. Channel support converges on the 2020 yearly opening-range lows at 1.2952 and a break / close below this threshold is needed to fuel the next leg lower in USD/CAD towards 1.2782. Key resistance now stands at 1.3323/64 with a breach / close above the 2019 high-week close at 1.3515 needed to shift the broader focus back to the topside.

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Bottom line: USD/CAD responded to key Fibonacci support early in the month and while further topside may be likely near-term, the broader risk remains weighted to the downside while below 1.3364. From a trading standpoint, look for topside exhaustion / swing high while within this channel with a break below the yearly range lows to risk accelerated losses for the Dollar. Review my latest Canadian Dollar Price Outlook for a closer look at the near-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 Technical Forecast - Trade Outlook
  • A summary of IG Client Sentiment shows traders are net-long USD/CAD - the ratio stands at +70.17 (70.17% of traders are long) – bearish reading
  • Long positions are2.52% higher than yesterday and 5.88% higher from last week
  • Short positions are16.25% higher than yesterday and 8.58% 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. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current USD/CAD price trend may soon reverse higher despite the fact traders remain net-long
USD/CAD BULLISH
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of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily -5% 7% -1%
Weekly -19% 38% -4%
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Key US / Canada Data Releases

US / Canada Data Releases - USD/CAD Economic Calendar

Economic Calendar - latest economic developments and upcoming event risk.

Previous Weekly Technical Charts

--- Written by Michael Boutros, Technical Currency Strategist with FxNews

Follow Michael on Twitter @MBForex

FxNews provides forex news and technical analysis on the trends that influence the global currency markets.

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