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Canadian Dollar Technical Outlook: USD/CAD Rally Stalls at Resistance

Canadian Dollar Technical Price Outlook: Near-term Trade Levels

  • Canadian Dollar updated technical trade levels – Daily & Intraday Charts
  • USD/CAD breakout responds to uptrend resistance- risk for near-term exhaustion
  • Resistance 1.2880-1.29 (key), 1.2938, 1.2951/75- Support 1.2719, 1.2676/97, 1.2640 (critical)
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The US Dollar surged more than 1.2% against the Canadian Dollar at the extremes this week with USD/CAD attempting at fifth consecutive weekly advance. The rally takes price into technical uptrend resistance and while the broader outlook remains constructive, the immediate rally may be vulnerable in the days ahead. These are the updated targets and invalidation levels that matter on the USD/CAD price charts heading into May. 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 - USDCAD Technical Forecast

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

Technical Outlook: In my last Canadian Dollar Price Outlook we highlighted that a near-term breakout kept the focus higher in USD/CAD while noting that, “losses should be limited to the monthly open at 1.2503 IF price is heading higher with a breach exposing topside objectives toward the yearly range highs.” Price briefly registered an intraday low at 1.2458 (close low was 1.2494!) before reversing sharply higher with a breach of the April opening-range taking USDCAD back into resistance at the yearly highs – it’s decision time.

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 continuing to trade within the confines of an ascending pitchfork formation extending off the April lows with the upper parallel highlighting the turn from key resistance today at 1.2880-1.29– a region defined by the yearly high-day close and the 1.618% Fibonacci extension. Risk for some near-term exhaustion here.

Initial support rests at the median-line / weekly open at 1.2719 backed by 1.2676/97– losses should be limited to this region IF price is heading higher on this stretch. Broader bullish invalidation now raised to the objective yearly open at 1.2640. A topside breach from here keeps the focus on subsequent resistance objectives at the yearly high-day close at 1.2938 backed closely by the 2019 low / 2020 yearly open at 1.2951/75– look for a larger reaction there IF reached.

Bottom line: The USD/CAD breakout has responded to uptrend resistance and the immediate advance may be vulnerable in the days ahead. From at trading standpoint, pullbacks should be limited to 1.2676 IF price is heading higher on this stretch with a topside breach above the 1.29-handle exposing fresh yearly highs. Keep in mind we are heading into the close of the month with US Core Personal Consumption (PCE) on tap tomorrow and FOMC & Non-Farm Payrolls (NFP) on tap next week. Stay nimble here into the May open. 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 - USDCAD Technical Forecast

  • A summary of IG Client Sentiment shows traders are net-short USD/CAD – the ratio stands at -1.22 (45.14% of traders are long) – typically weak bullish reading
  • Long positions are9.84% lower than yesterday and 46.87% lower from last week
  • Short positions are 1.20% higher than yesterday and 27.79% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests USD/CAD prices may continue to rise. Traders are further net-short than yesterday and last week, and the combination of current positioning and recent changes gives us a stronger USD/CAD-bullish contrarian trading bias from a sentiment standpoint.

US / Canada Economic Calendar

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

Economic Calendarlatest economic developments and upcoming event risk.

Active Technical Setups

– Written by Michael Boutros, Technical Strategist with DailyFX

Follow Michael on Twitter @MBForex